The Tanzania Petroleum Development Corporation (TPDC) and Dangote Industries Tanzania have entered into a 20-year deal that could see the price of cement in the country decrease.
The deal will involve the supply of affordable natural gas to produce electricity at the Dangote cement plant in Mtwara. This will result in increased production and ultimately a decrease in cement prices.
Tanzania has been facing a shortage of cement which has seen the prices increase from between $4 and $6 for a 50-kilogramme bag to between $8 and $10.
The 20-Year Deal
Dangote’s plant will produce up to 35MW of electricity from natural gas and later boost the capacity to 45MW. This will surge the production capacity of the plant from 2,000 to 6,000 tons each day thereby decreasing the production cost.
The chief executive of Dangote Industries Jagat Rathee said the company has been utilising an average of 106,000 litres of diesel each day to generate between 2,000 and 2,500 tons of cement.
“High production cost due to reliance on electricity generated from diesel-fired turbines is the major challenge facing the plant,” he added.
In the first phase of the 20-year deal, TPDC will supply eight million cubic feet of natural gas to Dangote and it will increase the supply to 20 million cubic feet in the second stage.
Dangote Industries Tanzania is the largest cement company in Tanzania and has a capacity of three million tons.
Installation of Natural Gas Supply
Dangote is currently finalising the installation for the supply of natural gas and the plant will start using the natural gas in 30 to 45 days. The use of natural gas will make cement prices more affordable.
TPDC is responsible for supplying natural gas in the country and Dangote will be the second factory that the national oil company will supply to after Goodwill (Tanzania) Ceramic Limited. Tanzania began connecting industries to the supply of natural gas in 2006, a project that the Pan-Africa Energy Tanzania is implementing.
