Dangote, Tanzania govt. reach natural gas supply deal

Dangote, Tanzania govt. reach natural gas supply deal

Tanzania and Nigeria’s Dangote Cement have reached a deal on the supply of natural gas to the firm’s manufacturing plant in the country after negotiations stalled over prices, Tanzanian President John Magufuli said on Saturday.

The 500 million dollars cement factory in the southeastern-Tanzanian-town of Mtwara, set up last year with an annual capacity of three million tonnes, runs on expensive diesel-generators and has sought government-support to reduce costs.

The plant was shut down recently on account of high energy costs and erratic power supply by the Tanzania electricity company.

According to the CEO Harpreet Duggal, the company Diesel generators push up their cost of operations.

To cut costs, the company wanted the supply of natural gas.

But the negotiations had stalled with the state-run Tanzania Petroleum Development Corporation (TPDC) saying the company was seeking “at-the- well prices”.

After meeting Aliko Dangote, the company’s chairman who is Africa’s-richest-man, Mr. Magufuli blamed unspecified middlemen of interfering with supply-plans and said the issue has now been resolved with gas-supplies to be sold at a “reasonable” tariff.

“They (Dangote Cement) will now buy natural gas directly from the state-run TPDC instead of going through middlemen,” Mr. Magufuli told journalists after the meeting.

He did not give details on the new tariff.

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

The company plans to roll out plants across Africa. In Tanzania, Dangote is seeking to double the country’s annual output of cement to six million tonnes.

The country announced in February that it had discovered an additional 2.17 trillion cubic-feet (tcf) of possible-natural-gas deposits in an onshore-field, raising its total estimated recoverable-natural-gas reserves to more than 57 tcf.

(Reuters/NAN)