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Govt changes tack as cement dries up
2007-12-18 09:44:27
By Judica Tarimo
The government has said it will revoke the cement importation licences issued to the 23 companies from the East African region failing to bring in the item by the deadline they were given.
Under the licences, the firms are allowed to import cement in a move meant to curb the acute shortage of the item which has touched off a countrywide skyrocketing of prices “Most of the companies concerned have not observed the conditions specified in the contract.
We are giving a 14-day grace period, failing which their licences will be revoked and we will have no option but to pass on the work to more serious firms ,” Industries, Trade and Marketing deputy minister Hezekiah Chibulunje told journalists in Dar es Salaam yesterday.
The companies were supposed to have imported a total of 130,000 tonnes of cement but until Wednesday last week only 4,701.5 tonnes had landed in the country.
Chibulunje said the government was confident that the increased supply of cement would have significant impact on prices, which currently stand at between 20,000/- and 22,000/- per 50-kg bag in retail outlets. Until recently, mainly before the shortage hit in earnest, the prices were in the 14,000/- to 15,000/- range.
With cement dealers understood to be behind the supply and price mess by randomly hiking prices under the pretext of reaping the benefits of a free market economy, the government is still undecided on the legal and other measures to take against the culprits.
The deputy minister stated at the weekend that all those behind the artificial shortage of cement and “the resultant unjustifiably high prices” were exploiting customers and would be dealt with under existing laws.
However, he fell short of specifying measures to be taken or saying when and how the government would launch a crackdown against recalcitrant dealers.
Eline Sikazwe, acting director of Industries in the ministry, told yesterday’s news conference that it was much harder for the government to control cement prices under the current liberalised market scenario than was the case when the country’s economy was centralised.
“In the present globalised market, prices of most vital commodities like cement are determined by the forces of demand and supply. It is well-nigh impossible for the government to do anything about it,” she noted.
The official, however, concurred with Chibulunje that saturating the market with cement was the most reliable and viable way out of the ongoing crisis.
The issuance of cement importation licences to private firms was, in the main, adopted as an alternative strategy to increase supply and subsequently lower prices but that has not worked to plan.
The government has also been calling on more local and foreign firms and businesspersons to put up cement factories to ensure adequate supply in the domestic market.
“Some of the existing cement factories have embarked on large-scale projects aimed at increasing production. All these initiatives are expected to boost supply, automatically making prices fall,” the Industries’ director pointed out.
Industry sources attribute the artificial scarcity of cement in Tanzania chiefly to a boom in demand in, and the lucrative prices offered by, neighbouring countries like the Democratic Republic of Congo as well as South Africa.
The government’s combined strategy of banning the exportation of cement and allowing imports from elsewhere in East African region was expected to stabilise the domestic market and cut prices. However, there has been little positive impact and prices have kept escalating.
Previous importation contracts were confined to firms based in the East African Community member countries but conditions have lately forced the Tanzania Revenue Authority to waive additional import duty on cement to allow traders from outside the region join the importation business.
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