Cement producers oppose TANESCO tariff review application

THE East Africa Cement Producers Association (EACPA) has expressed concern over the proposed 68 percent power tariff hike by the Tanzania National Electricity Supply Company (TANESCO), saying should the proposal be accepted production costs are bound to increase drastically.The association claims it is already penalized badly by the costs related to power rationing adding that cement producers recorded 1782 power rationing cases during between 2012 and 2013.

A statement issued in Dar es Salaam at the weekend by the EACPA- TZ Chapter Chairperson Catherine Langreney said besides increase in direct production costs, unlimited number of products and services necessary for operations of a cement factory would also suffer Cost increases that will have an indirect impact on locally produced cement.

“We strongly oppose any increase on the power supply tariff by TANESCO and request an urgent solution for the deficient service provided. Should the proposal be accepted, it would have a direct impact on the Tanzanian cement industry production costs up to Tsh 1150 per bag.

“This amount will be 100 percent charged directly to the final consumer thus negatively affecting infrastructural and economic development of Tanzania,” Langreney said.

Ms Langreney who is also the Mbeya Cement Company Limited Chief Executive Officer said Tanzania’s cement industry is also set to be further penalized with cheap imported cement since cement imports will not be affected directly by the increased production costs.

“This will increase the risk of tax collection and will lead to lower revenues for treasury and job reduction in all cement factories and their contractors,” she added.

She noted that the proposed tariff increase would significantly impact on inflation in Tanzania not only to cement related products and construction projects but also to products and services manufactured or rendered in Tanzania.

“The impact of the proposed tariff hikes on the Tanzanian economy could be catastrophic and the consequences dramatic for the general population,” she warned.

EACPA a few months ago called upon the Government to create a leveled playing field for local cement manufactures by put in place measures that will ensure adequate payment of import duties and taxes on imported cement.

The Tanzanian cement producers are currently struggle with high input costs due to unreliable power and poor transportation infrastructure that makes it hard to compete with imported cement especially from Pakistan.

The cement sector in Tanzania has for the last five years been growing at an average of nine per cent with its contribution to GDP increasing from 7.7 per cent in 2008 to 8.1 per cent in 2012.