The Managing Director Mr. Erik Westerberg during a meeting recently in Dar es Salaam Photo By Kenan Kalagho)
By Kenan Kalagho, 28 May 2012
Dar es Salaam, Tanzania — High taxes, poor
infrastructure, unreliable electricity supply and the uncontrolled
inflow of foreign products at lower prices are some of the reasons cited
that are hindering local firms from competing on the world market. By Kenan Kalagho, 28 May 2012
Speaking to the East African Business Week during Tanga Cement's AGM in Dar es Salaam last week, the Managing Director Mr. Erik Westerberg said that there is poor and unreliable rail transport in the country and that it is escalating the prices of cement products in the country.
"We are relying on road transport to move our products which is very costly, " Westerberg said. "If we were to use rail transport it would reduce the costs of production thereby reduce the final prices."
Westerberg added that these costs were affecting productivity of manufacturers in the country and therefore causing an increase in prices of local products.
He added that, if the rail transport was to be reliable, there would be an assurance that the prices of cement in the country which is currently sold at $9.61 a bag could drop further.
"There is unreliable rail transport in the country. The increase in the costs of our products is partly due to poor infrastructure," Westerberg said.
He noted that only a total of 75,000 tons of cement was being produced by Tanga Cement using the locally available clinker while the yearly demand stands at 1.3 million tons.
"The rest depends so much on imported clinker so as to meet the 1.3 million tons which is proving to be very expensive compared to the locally made clinker," Westerberg said
He said that the company would soon launch an initiative aimed at using locally manufactured clinker that will reduce importation of such products which are increasing the costs of production.
"We realized that it was important for us to use the locally produced clinker in order to reduce the costs involved in the expensive imported clinker. This will also mean increasing our production as well because there will be a marked reduction in costs as a result," he said
He also noted that there is an urgent need for the Tanzanian government to level the playing field for both local and foreign companies.
"We usually pay a lot of taxes which the government reinstated in 2005 while at the same time, we face an acute shortage of power where about 30% of the total electricity required to run the company depends on the company's own production. Partly, this are some of the reasons for the high cement prices," Westerberg said.
He added that last year, Tanga Cement generated 12% of electricity while at the same time importing coal from South Africa for electricity production to run their machines.
The Cement firm's chief said that they hoped to start buying locally produced coal.
He advised the government to come up with better ways of controlling the influx of low priced foreign construction materials.
"These foreign manufacturing companies enjoy subsidies from their governments, they have a reliable electricity, while enjoying a very good infrastructure" he said.
Of recent, Tanzanian market has seen the flooding of Cement from India, Pakistan and China at lower prices which is threatening out competing that from the local companies whose cement prices are higher.
He advised the government to reinstate tax exemptions to bring down the cement prices.
Meanwhile, the company has approved the construction of a second kiln to counter the rapid economic growth of the East African Community.
The TCC board of directors approved the construction of a second kiln, a move which will see the manufacturer increase its production capacity by 600,000 tonnes a year.
Mr Westerberg said, the construction of the second kiln is expected to commence in the third quarter of 2012, with commissioning in the first quarter of 2015.
The project will cost an estimated $165 million
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