TANGA Cement has said lack of Tanzania Railway Corporation (TRC) locomotives for transporting cement to the northern regions is likely to increase production costs.
The resumption of the Moshi-Arusha passengers and freight railway services came after more than 30 years since the operations were halted.
"We have opened up the line for Moshi and Arusha; but if there are no locomotives, we cannot use the facility. So, the railways system should be available to transport large volume of cement and other goods at all times," said Tanga Cement Managing Director, Reinhardt Swart.
He added, "Although we have agreed on transport charges with the TRC, there is no signed agreement on this so far. But, if they change their mind and increase the transport charges, I would have no option but to also increase our extricate prices, something which we have not done since June this year."
He said the Tanga Cement has not increased the price since June this year but will presumably do it in January next year based on the cost of production.
Another challenge that may lead to hiking cement prices is the high cost of transporting coal from the mining area to Tanga, which is more than the actual core business when it is used to fire the kiln.
"Unfortunately for us in Tanga Cement, coal is located in the far south of the country, and the only way we can get enough of it is by road, from a distance of approximately 3,300 kilometres," he said.
He pointed out the other challenge regarding further investment is the agreement signed with the Tanzania Investment Centre (TIC) in 2013 has not been gazetted.
He said by the fact that it is not gazetted yet means that the company has to allocate funds for possible payment of what was promised, but not paid.
"Because it has not been gazetted, I cannot claim the benefits and our shareholders cannot provide money without gazetting the agreements, thus posing huge challenge to the expansion of our business," he noted.
Also despite being the largest user of electricity, Tanga Cement is still facing intermittent power supply that is causing disruption of production.