The Tanzanian government is in talks with the Dangote Cement Company over the supply of natural gas to its manufacturing plant. At the moment, negotia
The Tanzanian government is in talks with the Dangote Cement Company over the supply of natural gas to its manufacturing plant. At the moment, negotiations are held up over prices, a government body in the East African nation stated. The $500 million cement factory in the south-eastern town of Mtwara, Tanzania was set up last year. It has an annual capacity of 3 million tonnes and the generators run on diesel – an expensive source of energy. The government has sought Dangote’s help to minimize costs.
Alhaji Aliko Dangote
Aliko Dangote, africa’s richest man is the major shareholder and chairman of the company is which stopped production at the plant last week due to technical issues.
The State-run Tanzania Petroleum Development Corporation (TPDC) stated that discussions were expected to end in January but price is yet to be agreed on.
TPDC states and we quote: “Dangote has held protracted talks with TPDC on the pricing of natural gas. The Dangote Cement factory has asked for gas supply at below market prices, equivalent to the price of raw natural gas from producing wells. TPDC cannot sell natural gas to consumers on “at-the-well price” due to the extra costs of processing and transporting the gas.”
Tanzania said in February it had discovered an extra 2.17 trillion cubic feet (tcf) of natural gas deposits in an onshore field, increasing its total estimate of recoverable natural gas reserves to more than 57 trillion cubic feet (tcf).
Africa’s biggest cement producer, Dangote Cement has a yearly production capacity of 43.6 million tonnes and aims at an output of 74 million to 77 million tonnes by the end of 2019 and 100 million tonnes by 2020. The company plans invest in plants across Africa.
In Tanzania alone, Dangote wants to double the annual output of cement to 6 million tonnes.
Charles Mwijage, Minister for Industries, Trade and Investments has reaffirmed that the government’s investment agreement with Dangote Cement granted by ex-President Jakaya Kikwete’s administration still hold. He said government not do anything to compromise Dangote Cement’s investment in the country. He further described Dangote’s entry as a ‘game changer’ because of reduction in the cost of cement, the Citizen newspaper reported. These statements were made in response to media speculation over a production shutdown at Dangote cement’ Mtwara plant.
Mwijage said Dangote Cement can reduce its production costs using local coal or gas. The Tanzania Petroleum Development Corporation, TPDC has been negotiating with Dangote cement since October 2016 on the supply gas.
He added that a competitor, Engro wants to build a cement plant too and the government desires to offer it same incentives like Dangote Cement’s.