Building boom ups cement demand

Local demand for construction cement surged in the first half of the year as a result of increased building activities in the country.

The six-month period ending June 30 saw a 10 per cent growth of the cement market compared to only three per cent recorded in the corresponding period last year.

According to Tanzania Portland Cement Company Limited's (TPCC) Managing Director Paschal Lesoinne, there has been a mounting demand for cement from East African countries, particularly from Uganda and Burundi.

He said that TPCC has received a lot of requests for supplies of construction cement to the two neighbouring countries.

Increased demand and improved production efficiency have boosted TPCC's net profit to about 32bn/- in the first half of the year, up from the 28.6bn/- recorded in the corresponding period last year.

Mr Lesoinne said that improved power supply also contributed to improved production performance of the company that sells about 95 per cent of its cement in the local market, with the remaining amount exported to EAC countries.

With the prevalence of a strong demand coupled with the ability to produce clinker locally, TPCC expects to improve its performance in the remaining half of this year. But the better results ahead remain subject to other fundamental factors like reliable power supply.

There might be a significant negative impact on the TPCC operations for instance if availability of natural gas is not guaranteed. "If the decision to stop supplying gas to TPCC is implemented, it will lead to the closure of the plant," he warned in an interview with the 'Daily News'.

He said TPCC has written to the Minister for Finance and Economic Affairs on the production risks which may arise regarding the order issued recently by the Ministry of Energy and Minerals to direct gas supplies to the Tanzania Electric Supply Company (Tanesco).

The company's unaudited results for the first six months of this year show that revenue increased by 19 per cent to 127.04bn/- compared to the 107.01bn/- recorded in a similar period a year before. The increase in revenue is attributed to higher sales volume.

"The TPCC net profit increased by 12 per cent mainly due to rise in volume coupled with better production efficiency resulting from the new facility," stated the statement.

However, the imported clinker negatively impacted on the costs of sales in the period under review because of the late start of the rehabilitated kiln combined with inconsistency in electricity supply. 

The rehabilitation of an old production line was completed in July this year. As TPCC continues to improve its results in a more competitive environment, it has been able to efficiently control all other costs and the increases reflect higher levels of activity.

One of the cement company's near future plans is to produce all the clinker it needs to satisfy its cement sales but only if the rehabilitated kiln is stable.

The Confederation of Tanzania Industry (CTI) Chairman, Mr Felix Mosha, said recently that the manufacturing sector has posted outstanding performances outweighing agro-products in the EAC markets and has even registered trade surplus.
Source: The Daily News,http://www.dailynews.co.tz, reported by Sebastian Mrindoko




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