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Cement firms told to review profit margins

30th January 2012
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Heidelberg Cement board chairman Dr Bernard Scheifele speaks at a reception organized by Tanzania Portland Cement Company Limited to board members from Germany when they visited the firm in Dar es Salaam towards the end of lat week. (Photo: Selemani Mpochi)

Cement industries have been urged to review their profit margins so that they could make the product affordable to more people, thus increase the per capital consumption.

At the moment the price of a 50 kg sachet at the sales outlets in Dar es Salaam ranges between 14500/- and 15000/- up from between 13,000/- and  13500/- three week ago.

The challenge was thrown in the city at the weekend by Industry and Trade ministry permanent secretary Joyce Mapunjo at a dinner party organised by Tanzania Portland Cement (TPCC) board. The company manufactures various brands of twiga cement.

She said Tanzania’s cement consumption is lower compared to her neighbours, a situation she noted was not healthy for the economy.

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

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

“I would like to register that local consumers are bitterly complaining on the the high prices of cement products,” she said.

The PS proposed a joint meeting between the government and stakeholders to see how the problem can be addressed.

According to her the cement industry also faces various challenges which need collaborative efforts to be alleviated.

The major constraint in Tanzania’s competitive platform has been on how to ensure the provision of cheap and reliable energy which is a vital input in manufacturing especially in cement industry.

Congratulating efforts taken by the company in finding out the alternative source of energy from Songo Songo to Wazo Hill, she said, the flow of natural gas is a tremendous intervention in an effort to substitute expensive Heavy Furnace Oil (HFO) and indeed a turnaround of the prospects of the company.

Another challenge is the distribution cost, which results from poor roads, traffic jams, lack of railway wagons and locomotives and high transport cost arising from high fuel costs.

She assured investors that the government is endeavouring to address the problems.

In the five year plan 2011-2016 launched by President Jakaya Kikwete in June last year, he put infrastructure and manufacturing sectors as among the top three priorities.

Implementation of the plan will provide permanent solution to the challenges and also improve income of the people so as to increase their purchasing power and therefore expand local markets.

For his prty TPCC board chairman Dr Bernard Scheifele, said the company is ready to make further investment and contribute to infrastructure construction.

Dr Scheifele revealed that a delegation of German investors is due to visit Tanzania next month to look for areas of investment.

SOURCE: THE GUARDIAN
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