No change in Dangote incentives, says minister

Dar es Salaam. Minister for Industries, Trade and Investments Charles Mwijage said yesterday that Dangote Cement is still enjoying the same incentives it was promised when the company was invited to invest in Tanzania.

Addressing a press conference yesterday, Mr Mwijage said the new government under President John Magufuli didn’t do away with any of the investment incentives which were negotiated granted by former President Jakaya Kikwete’s government.

The press conference was attended by the acting managing director of Tanzania Petroleum Development Corporation (TPDC) Kapuulya Musomba and acting commissioner of minerals John Shija.

The minister didn’t reveal the incentives as his aides, who were present in the meeting, advised him not to.

Reports are rife that the current government is of the view that some of the incentives accorded to Dangote Industries Tanzania Limited to install the $500 million (Sh1 trillion) industry were unjustifiable and had to be scrapped. The refusal by the government to continue granting Dangote incentives such as exemptions on import duty for diesel have led to what the company sees as overly high production cost.

Stressing that the observation wasn’t correct, Mr Mwijage said: “The matter is exaggerated… Dangote Cement is still enjoying all the incentives that they were getting when they opened shop during the last administration.

“Of course, it is difficult to fulfil an investor’s wishes by 100 per cent…indeed many wish for more and more tax reliefs, but a law was passed to control tax incentives by the last regime in 2014.”

Mwijage said the government would do nothing to compromise the Dangote investment since it is the game changer in the cement industry in the country.

“Since they started production, prices have gone down from Sh16,000 per bag to Sh11, 000. But we can’t take the risk of lowering costs for them alone. Currently we have 11 manufacturers with a capacity of producing 10 million tonnes out of which Dangote can produces 3 million. So even these 10 also need our eye and care.”

According to Mr Mwijage, another big cement manufacturer, named Engro, has shown interest in opening up shop in the country and has requested the same incentives that Dangote receives and said it doesn’t have any problems with that.

Addressing the issue of high production cost that is purportedly crippling the Dangote plant, the minister said the company has two options at its disposal to avoid high cost: using local coal or using natural gas.

TPDC currently charges $5.14 per 10,000 cubic feet but the Minister for Energy and Minerals, Prof Sospeter Muhongo, is facilitating negotiations to enable Dangote Cement pay at least $4 because the factory is located near the gas wells.

“There’s $3 dollar charged as head-well tariff which covers costs of extraction and processing which is not contested; there’s also $2.14 for transportation, this is the one that is somehow contested, and to avoid more bureaucracy,  Prof Muhongo is sorting this matter and at the end consumers will pay in accordance to their location,” he said.

The minister also addressed concerns raised by Igunga MP who chairs the Parliamentary Committee on Industries, Trade and Environment, Dr Dalay Kafumu, who posted in social media sites that the government was slow in delivering promises which were made to attract the company to invest in the country, including providing access to cheap limestone, tax relief, ample land and cheap natural gas.

But the minister said the Dangote factory stands at the heart of limestone deposits which it can exploit for more than a century. “The issue of tax reliefs is hearsay; there’s no evidence to back it up and it is exaggerated.”

With regard to local coal, the minister said early this year that the price of a tonne was $45 but that was reduced to $39. “As of yesterday (Wednesday), the cost of a tonne until it reaches the Dangote plant was $90 and from South Africa was it is $103. So our coal is much cheaper and of better quality.”