Hima Cement says it will officially start production at its $40m (Shs 144 billion) new plant in Tororo next month, a move that is likely to ease pressure on cement prices in the country.
Construction of the plant started in January last year. George Nicola, the Hima Cement Uganda chief executive, told reporters at the sidelines of a medical camp held in Tororo last week that the price of cement is a complex situation and only increased production can solve it.
The price of cement has skyrocketed in recent months to a retail price of between Shs 45,000 and Shs 50,000 per 50kg bag. The high prices have led to government to give a green light to wholesalers to import cheaper cement if the manufacturers do not lower prices in the next 3 months.
In neighbouring Kenya, a price of 50kg bag goes for as low as Shs 8,000. Simba Cement, a new player in the market, projected that their entry will lead to a drop in cement prices from Shs 40,000 per 50kg bag to Shs 20,000.
"It is not the producers increasing the price but it's the full distribution channel that has been impacted," Nicola said.
Nicola added that cement producers have been experiencing some power and raw material supply challenges which has affected production volumes.
"What is causing the price to go up is because our customers' distributors and retailers don't get enough volumes so they have to recover the margins by increasing the price," he explains.
Nicola said they have their new 0.8 million metric tonnes plant running ahead of schedule by first week of May. More production is likely to come from Tororo Cement's new 1.8 million metric tonnes and Simba Cement's new plant. This is likely to increase cement production capacity to 6.8 million metric tonnes per year, up from 3.6 million metric tonnes per year.
Local demand is currently at 2.4 million metric tonnes per year, experts say there will be an oversupply which will be expected to drive down the cost of cement.
At least 3000 local residents in Tororo were able to receive free treatment from a two day medical camp organized by Hima Cement in partnership with Case Med care and medical personnel from eastern district.