By GEOFFREY NANGAI
SABMILLER Plc, the strategic investor in Tanzania Breweries Limited (TBL) has cried foul over the 25 percent Excise Duty Increase on beer products as announced by the Finance Minister William Mgimwa while presenting Government’s Budget for 2012-2013.
TBL through a statement seen by businesslinktz.blogspot.com that was issued yesterday said its strategic investor (Sabmiller) is thus considering suspending a $23 million capital investment plan this year because a tax increase announced by the government this month may curb beer consumption.
Mgimwa in his June 14 budget speech announced a 25 percent increase in excise duty on beer made from imported unmalted cereals to 525 Tanzanian shillings (33 cents) a liter.
The statement said the company has made total contribution of Excide Duty of TAS. 526bn for the last five years which was achieved through inflationary prices and in line with annual Excise rate increases.
“The unprecedented declared 25 % increase in excise duty on our beer brands will certainly have an impact on our business and shall result into a decline of volume consumption due to price elasticity and potential loss of taxes due to volume decline.
“It should be noted further that there are additional costs which will adversely affect our operations such as the price increase in natural gas , 32% increase in water tariffs and a 40 % increase in electricity tariffs,” the statement said.
The TBL Managing Director Robin Goetzsche when contacted for comment on the matter said the company will be reviewing capital expansion based on expected lower volumes
“Sincerely, the rest of our East Africa operations are unaffected at this stage,” he added.
SABMiller has so far invested $420 million to expand TBL production capacities at Dar es Salaam, Arusha and Mwanza as well as the newly constructed state of the art Greenfield brewery in Mbeya at a cost of $67m.
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