Ethiopia: Dangote plant attracted with cheap power deal

Dangote’s decision to establish a 2.5Mta cement plant in Ethiopia was motivated by a government guarantee of cheap electricity, Muhammadu Sanusi, the Emir of Kano, has claimed at a meeting of Nigeria’s National Council on Development Planning.

In a speech reported in the Premium Times, the former Central Bank of Nigeria governor said that Dangote was promised a price of US$0.03/kWh if it would agree to build a plant in Ethiopia. This price is half the US$0.06 paid by consumers in the country and one-third the estimated cost of production.

Lower power prices have allowed Dangote to produce cement much more cheaply, with the result that the company has been looking to broaden its market share in neighbouring countries. Last week it was reported that Dangote had begun shipping to Kenya, where it was selling cement for up to 40 per cent less than local brands.

Emir Sanusi claimed that this example of state support had produced benefits for Ethiopia in the form of a 60 per cent fall in domestic cement prices and a concomitant boost to the construction industry. He went on to argue for a similar interventionist approach in Nigeria aimed at fostering local industries and protecting them against foreign competition.