Ethiopia’s energy efficiency aids cement market in East Africa

08 September 2016

A cheap electricity deal that attracted Aliko Dangote to set up a cement plant in Ethiopia could impact the cement market in East Africa as the Adaberga Wereda-based plant starts exporting cement at almost 40% less than regional manufacturers.

The Ethiopian government offered to supply Dangote with electricity at a discounted rate of “three cents per kilowatt hour” in exchange for building a plant there. This enabled Dangote Cement to cut the cost of producing a ton of cement by 60%, Nigeria’s former central bank governor, Sanusi Lamido Sanusi, said recently.

“For a cement manufacturer, that is all the incentive that you need,” Sanusi said, adding that this helped the construction industry in Ethiopia to boom. The low-cost cement is now being exported to neighbouring countries like Kenya, where retail prices have remained static even as competition increased in the sector over the last decade.

This is likely to shake up the regional cement market and make it affordable for construction developers to build more properties, Business Daily reported.

Dangote Cement said last week that it had started exporting to Kenya at $74 per ton, nearly half of what local manufacturers sell their brands. Ethiopia, one of the beneficiaries of the Power Africa program, an initiative of U.S. President Barack Obama, has the highest electricity generating potential in East Africa due to its vast number of rivers and hilly terrain. 

It has invested billions of dollars to build several hydro-electric power plants including what will be Africa’s largest dam — the Grand Ethiopia Renaissance Dam (GERD).

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