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Cement producers advised to set up regional depots

17th February 2012
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Industry and Trade minister Dr Cyril Chami

Cement manufacturers in Tanzania have been advised to establish own cement depots in remote areas so as to have the commodity’s retail price reduced.

The advice was given by Industry and Trade minister Dr Cyril Chami when speaking on the development of the industry in Dar es Salaam on Wednesday.

He said time has come to make the price of cement in the regions located far away from production points be similar or same to that of the regions where the commodity is manufactured.

“Although the manufacturing firms incur transport costs in shipping the product to the market, they dispose it at retail prices that are not affordable to the ordinary people,” he said.

He cited the case of Coca Cola which disposes of its drinks at same price in all the regions, saying this has been made possible with the availability of depot services.

Cement manufacturers should emulate what the cold drink producers are doing by establishing their own godowns so as to ensure equitable retail price of the products in all the regions.

However a spotlight investigation done by this paper has revealed that the retail price of cement has slightly increased effective last month.

A 50-kg sachet has now reached 15,500/- from 14,500/- sold last year in Dar es Salaam. While in many regions the same bag goes up to 16,500/- depending on distance from the factory.

The increase was due to the hike in factory price announced by the Tanzania Portland Cement Company (TPCC) early this year. The wholesale price for the 50-kg bag of cement at factory price stands at 12, 439/- up from 11, 960/- last year.

The company attributed the price rise to the constant depreciation of the shilling against the dollar.

Higher production costs and use of the dollar in natural gas procurement have led to increased cement prices, the company management said.

It buys gas from Songas (T) Limited and imports raw materials in dollar terms, whose value regularly rises against the shillings.

For his part, Association of Cement Manufacturers in Tanzania official Pascal Lesoinne, said the retail price of cement in various regions is not high because they have contained the situation.

He said they have been conducting regular surveys to cement dealers to ensure that manufacturers don’t impose unaffordable retail prices.

Lesoinne, who is TPCC managing director, said they have heeded the minister’s call and are ready to establish regional depots.

“We have many challenges in this industry including unfair competition from subsidized cement manufactures, but we will forward them to responsible government departments,” he noted

He said a clear request for suspended duties on cement to be reinstated at 35 percent (or USD50 per ton) has been brought to the government but no decision has been effected.

Import duties on cement were abolished in 2008 when East African Customs Union protocols were being put to full use, after five years of surcharging Kenyan exports to give local industry time to adapt.

“This is a clear breach of the understanding between the government and cement producers when all agreed to support the industry in view of the firm’s expansion plans for the period 2007-2010,” he noted.

Experts say Tanzania’s cement consumption is lower compared to her neighbours, a situation which is not healthy for the economy.

The people’s low purchasing power is another major concern, leading to the low per capital consumption of cement, they say.

Tanzania’s cement consumption per capital is 40kg per annum compared to 56kg for Kenya and 400kg for South Africa.

SOURCE: THE GUARDIAN
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