Government warns cement dealers against artificial price hikes

Thursday August 13 2020

 

By By Rosemary Mirondo @mwaikama rmirondo@tz.nationmedia.com

Dar es Salaam. The government assured the public yesterday that there was no need for cement price increases, warning that stockists who raise prices haphazardly will face the music.

Industry and Trade minister Innocent Bashungwa directed relevant authorities to revoke licenses for any distributor who increased price contrary to the value.

Prices of cement rose by about Sh500 in July due to what was earlier reported to be the impact of Covid-19.

This was largely because factories found it hard to bring in some spare parts because the global pandemic had disrupted logistics systems across the world. This partly disrupted cement supply, pushing prices slightly up as soon as the country was announced Covid-19 free.

But speaking during a tour of the Tanzania Portland Cement Public Ltd Company, which trades as Twiga Cement, yesterday, Mr Bashungwa said prices must remain constant.

“Covid-19 did not affect production nor prices of cement. The only problem is that industries faced a shortage of spare parts during that period and were therefore delayed in doing maintenance, but otherwise things are back to normal,” he stressed.

Tanzania has a total of 14 cement producing companies which have a joint production capacity of 10.6 million metric tonnes per year.

The factories however produce a total of six million metric tonnes per year against an annual demand of 5.6 million metric tonnes.

Mr Bashungwa said Twiga Cement and other cement companies were currently in the process of increasing production in the near future.

The extra 400,000 metric tonnes of cement is exported, largely to neighbouring countries.

According to Twiga Cement’s head of commercial cluster for East South and Central Africa, Yves Mataigne, the company was in the process of investing Sh70 billion more during the coming few years in an effort to boost its annual production from the current 1.9 million metric tonnes to 2.2 million tonnes.

Explaining about production he said in July there had been more demand because a majority of companies had failed to bring raw materials from the borrow-pit for production.

The firm’s service commercial manager, Mr Danford Semwanda said the company has invested Sh105 billion in the last five years and the budget for 2021 is estimated at Sh33 billion.

He noted that currently, the wholesale price for the product was Sh13,300 while the retail price stood at Sh14,500.

“Distributors are not responsible for increasing price but retailers based on demand supply,” he said.

Explaining why demand for cement shot up in July he said the reasons included post rainy season impact where the heavy rains destroyed a number of roads and houses that automatically needed repair.

He further noted that post-Covid-19 impact also increased demand for cement both nationally and regionally following a rush for the product following decrease in the pandemic.

“There was a further increase in demand during the month of July because many neighbouring countries that were on lockdown including Rwanda demanding more of the product.