TPDC, DANGOTE AGREE ON GAS TARIFFS

TANZANIA Petroleum Development Corporation (TPDC) and Dangote Cement Company have finally agreed on gas tariffs and costs of constructing infrastructure to supply the energy to the cement manufacturing plant.

TPDC acting Managing Director Kapuulya Musomba, addressing reporters in Dar es Salaam late yesterday evening, said the two parties have as well agreed on costs of connectivity of the cement plant to the Mtwara-Dar es Salaam gas pipeline.

“These agreements have been reached in compliance with President John Magufuli’s directives during his official tour of Mtwara recently,” explained Engineer Musomba, hinting that the two parties have had a weeklong deliberation on the project.

He could not, however, reveal the agreed prices, saying that will be announced after appraisal by the Energy and Water Utilities Regulatory Authority (EWURA). Now that the two parties have agreed on the costs, what lays ahead is the procurement of a contractor to work on about six kilometres of the pipeline and other infrastructure to supply the gas to the factory.

“We have reached consensus...the industry will foot the construction costs for connectivity facilities, which will be recovered later in the gas sales.

TPDC and Dangote can not disclose the facility costs lest we jeopardise competition in the tendering process. Design and drawings for the facility have been completed,” stated Engineer Musomba. Dante Group of Industries’ Executive Director Sada Ladan-Baki welcomed the agreement between the two parties, saying it will improve efficiency at the Mtwara cement plant.

“With natural gas supply to the factory, our customers should expect reduced prices of our products.” He said the company requires 45 megawatts of electricity to operate the plant, which currently relies on diesel and coal-fired power.

Once the natural gas reaches the plant, the cement factory will be generating its own power from natural gas. During his tour of Mtwara, Dr Magufuli directed the Minister for Energy and Minerals, Prof Sospeter Muhongo, to ensure the cement factory is immediately supplied with natural gas by TPDC.

At the Mtwara event, Africa’s richest man and owner of the cement firm Aliko Dangote informed President Magufuli that he had so far invested 650 million US dollars (over 1.4tri/-) in the factory, which envisages producing three million tones of cement per year.

The Nigerian business tycoon said the plant currently employs 20,000 people and has lowered the retail price of its cement from 15,000/- to 10,000/- per 50-kilogramme per bag after ramping up production.

Although the government announced in December, last year, that it had reached a deal with Dangote Cement on the natural gas supply to the factory, Dr Magufuli was disappointed to learn that the natural gas is yet to reach the factory.

Dangote Cement, Africa’s biggest producer of the construction material, has an annual production capacity of 43.6 million tonnes and targets output of between 74 and 77 million tones by 2019 and 100 million tones by 2020.

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