Tanzania: Dangote Cement stops production

Trouble bedevilling operations of the Dangote cement factory in Mtwara could derail the mega plant and blot the country’s attractiveness for investment.

The $500 million (Sh1 trillion) investment by Aliko Dangote of Nigeria was commissioned in October 2015 but high operational costs associated mainly with overdependence on diesel have led to a complete halt last week.

Sources from within the government and in the Dangote Industries Tanzania Limited say that the Dangote Cement investment has found itself in the middle of fierce political crosswinds. between key members of the current administration and those from the immediate past administration.

To convince Dangote Cement to come to Tanzania President Jakaya Kikwete’s administration provided many incentives, but the current administration regards many of the incentives to be unjustified. “Complicating matters is the fact that some powerful politicians who served in the past administration seem to have strong, vested interests in Dangote Cement,” a Member of Parliament from Mtwara region said.

The natural gas promise evaporates into thin air

Sources within Dangote Cement also said the investor has been frustrated by the lack of cooperation in helping it access cheap fuel, either from natural gas, drilled a few kilometres from the factory or from cheap imported coal from South Africa.

Dangote Cement management has complained about the failure to access the natural gas, forcing the factory to use six million litres of diesel per month (equivalent to ±Sh10 billion) preventing Dangote Cement from breaking even in the foreseeable future.

The government ban on coal imports from South Africa sealed the doors for alternative cheap fuel. The Minister of Energy and Minerals Prof Sospeter Muhongo recently said the ban is not going to be lifted. A statement released yesterday by Dangote Cement said talks were ongoing with the government to see how production costs incurred by Dangote Cement could be lowered.

Mtwara CCM Regional Secretary Shaibu Akwilombe said suspension of production by Dangote Cement was a shame to the government that worked so hard to bring the investment into the country and could deal a blow to the hopes of seeing Tanzania industrialise. Dangote Cement, which produces 7500 tonnes of cement per day, employed 149 permanent workers and 405 expatriates at the start of production in January. Contractors working with the factory also employed 400 workers.