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Why $540 million cement project has yet to take off
A cement factory. PHOTO | FILE
What you need to know:
- The Tanzania Investment Centre says the plan has been held up by the investor’s request for additional incentives, but work is expected to start soon
Dar es Salaam. The plan by a Chinese company to set up a multi-million-dollar cement manufacturing plant in Tanga is still on, according to the Tanzania Investment Centre (TIC).
TIC said in 2019 that it had already provided Sinoma and Hengya Cement Tanzania Limited with the relevant incentives to start construction of its $1 billion (about Sh2.5 trillion) manufacturing facility, billed to be the largest of its kind in East Africa.
However, the amount was later revised to $540 million (about Sh1.3 trillion), with the project expected to create about 4,000 and 8,000 direct and indirect jobs, respectively.
But with scanty information on the progress of negotiations, The Citizen sought updates from the TIC and the agency’s executive director, Mr Gilead Teri, said the delay was due to the investor requesting for more incentives.
“We value this project because it will change the lives of Tanga residents and come as a big boost to the construction sector. This investor faced two challenges. One was payment of compensation to Kilindi District residents and a request for the status of strategic investor, which requires additional incentives,” he told The Citizen in an exclusive interview.
However, Mr Teri added that negotiations for additional incentives were at an advanced stage after which Cabinet approval would be awaited so that the project’s execution could begin.
Elaborating further, he said the project was to be implemented in Tanga, near the port, and Kilindi District, but payment of compensation to people who would have to move out was a challenge as the number of residents was increasing day by day.
As such, they decided to abandon that area and the project will now will be implemented at another location within Tanga City.
Mr Teri added that in showing commitment to the project, the investor had already deposited over $20 million for the purchase of various raw materials that would be used in the production of cement.
“I’m taking this opportunity to ask Tanga residents and Tanzanians in general to be patient as the government works on the incentives requested by the investor. We are confident that the project will be up and running before the end of next year,” he said.
Mr Teri added that efforts currently being made were in line with President Samia Suluhu Hassan’s directive to TIC to address all challenges investors were grappling with.
“We want this investor to come to our country because construction is among sectors that have been growing swiftly in recent years. This makes this particular investor very important to our country.”
However, Mr Teri did not disclose the additional incentives the investor was requesting for, only saying that most investors wanted incentives that would reduce initial operating costs.
In another development, Mr Teri said investment laws had been reviewed to make it easier for potential investors to invest in Tanzania.
“We welcome investors to come and invest in our country. We are also ready to consider joint ventures for investors who find the going tough.”
According to initial plans, at least 70 percent of the cement that would be produced at the plant would be exported to several countries in the region, including the Democratic Republic of Congo, Uganda and Sudan, while the remaining 30 percent would be sold locally.
Apart from producing cement, the plant is also expected to generate up to 1,200MW of electricity using coal. The electricity will mainly be used to power the cement factory.
