Dangote, TPDC sign deal on supply of natural gas for power generation

Dar es Salaam. Tanzania Petroleum Development Corporation (TPDC) yesterday signed an agreement with Dangote Cement that will see the firm produce electricity for cement production at its Mtwara plant using natural gas.

Actual generation of electricity from natural gas will start within two months from now, the cement maker’s country manager for Tanzania, Mr Jagat Rathee, said in Dar es Salaam yesterday.

With the natural gas, the company will be able to generate up to 40MW of electricity a day, up from 22MW which the company is currently generating using diesel. “With this agreement, we expect to start generating electricity from natural gas in the coming 30 to 45 days,” he noted.

The development creates hope that production at the country’s largest cement producer will not be affected by electricity challenges, resulting in a number of benefits to consumers such as reduced prices.

According to him, infrastructures have already been constructed with installation of a natural gas pipeline from Block Valve Station one (BVS 1), a 132 metre distance to the cement factory. Again, the company has transformed its systems from diesel to natural gas consumption.

“We are currently doing some tests before complete consumption kicks off,” he noted.

The company, which has only increased production from about 2,500 tonnes per day to about 5,000 tonnes in response to a lower supply that has seen prices increasing, is expected to further up its cement making to 6,000 tonnes per day when the use of natural gas starts.

“With natural gas, our operational costs will go down and ultimately, the price of cement will also be reduced,” he said.

The factory will consume at least eight million standard cubic feet of natural gas from more than six million litres of diesel per month at a total cost of about Sh10 billion.

Dangote Cement will be the 42nd industry to be connected to the use of natural gas in the country, according to TPDC’s acting managing director, Mr Kapuulya Musomba.

It will also bring the total amount of natural gas consumed by factories in the country to 23 million standard cubic feet per day. “Our goal is to connect as many industries as we can….With this agreement, we are obliged to supply natural gas to Dangote for a period of 20 years,” he said.

He was positive that, during the 2018/19 financial year, TPDC will be able to connect seven other industries to natural gas.

Dangote Cement is investing at a total cost of $915, 953.59 (about Sh2 billion at the prevailing exchange rate) in the first phase of the gas to electricity power generation.

Meanwhile, TPDC is also implementing the second phase worth $3.75 million including tax that will see another natural gas pipeline being installed at the cement plant for heating and production activities.

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