Tanzania: request to protect local cement firms declined

The Tanzanian government has again rejected local cement producers' pleas for an increase in the common external tariff on cement imports. Instead, the cement companies have been asked to calculate their genuine production costs so that the government can help them compete fairly with their foreign counterparts.

The Minister for Trade and Industry, Dr Abdallah Kigoda, said in Dar es Salaam that the government is not planning to remove the suspended duties on imported cement, but would instead put in place conditions necessitating smooth operation. The move includes provision of reliable electric power, passable roads and railways systems for a beneficial distribution network. Stakeholders have always complained that imported cement is sold cheaply because Pakistan, India, China and even Egypt heavily subsidise their producers.

Tanzania imports about 250,000tpa to bridge the deficit. The government's position came to the fore when the minister was inaugurating Kiln 3 upgrade project at Tanzania Portland Cement Company Limited (TPCC), at Wazo in Dar es Salaam.

The minister's remarks followed a request from Mr Jean Marc Junon, the chairman of the TPCC Board, that the cement industry is still going through tough times with the suspended duties on cement removed, causing massive inflows of subsidised cement imports.

Dr Kigoda said the government is committed to put in place initiatives to support such good models of the private sector. He added that TPCC should continue putting systems that are more efficient and cost effective. He praised TPCC for having moved from producing 700,000tpa of cement in 2008 to 1.3Mta to date.

TPCC has the largest domestic market share of over 41 per cent. He said the government is currently embarking on a strenuous exercise to enhance the country's competitive position for investment flows destined for the region and meet the challenges of globalisation.

In May, this year, the ministers for Finance from the EAC agreed on continuing to apply the Common External Tarrif rate of 25 per cent instead of 35 per cent on cement for the period of one year.

Tanzania's local cement industries are capable of producing 3Mta of cement, against the country's yearly demand of 2.1Mta. Tanzania Portland Cement is the major producer with a production capacity totalling 1.4Mta, followed by Tanga cement with a 1.25Mta capacity.

The Mbeya cement plant has an installed capacity of 350,000tpa. At the launch yesterday, the TPCC chairman, Mr Jean Marc Junon, said that more than TZS25bn has been spent in the modernisation of the key equipment that will ideally complement kiln 1 and kiln 4, bringing the total capacity of clinker produced at Wazo Hill to 1.2Mta.