The bone of contention in December 2016 was over the availability of natural gas for Dangote to run his cement operations in Tanzania.
In 2014 the billionaire was assured that he would have access to cheap natural gas to power the factory. Consequently the factory was established near Mtwara, where there are natural gas deposits.
With the assumption of John Magufuli’s administration came policies that countered the previous agreement of Dangote and former president Jakaya Kikwete.
And in what seemed to be a non-verbal feud, Dangote boycotted Tanzanian coal and opted to import from South Africa. The Tanzanian government equally found this move unfavorable as the East African nation has substantial coal deposits.
With a subsequent ban on coal importation, Dangote’s cement factory spent as much as $4 million per month on diesel.
Harpeet Duggal, Dangote Tanzania CEO, said:
“Our plant uses six million liters of diesel per month to run generators after the promises to supply it with natural gas, which is produced in a nearby gas field, failed to materialize.”
Dangote finally shut down the $500 million cement factory which has an annual capacity of 3 million tonnes. Economic analysts warned and advised the government to reconsider their stand on the dispute with Africa’s richest man.
The disagreement tended to give a wrong impression to investors who had businesses for Tanzania.
President Magufuli met with Nigerian billionaire and reached an agreement that the Dangote group
“will now buy natural gas directly from the state-run TPDC (Tanzania Petroleum Development Corporation)”.
Adding to that, the Tanzanian government has now offered the Dangote a group a 10-square-kilometre plot of land to mine coal for the running of the cement factory.
Since the ban on importation of coal from South Africa, it was discovered that the only coal producing company in the country, Tancoal, could not sufficiently meet the market demands.
Consequently the Tanzanian ministry of energy and minerals has thought it wise to make a source of coal supply available for the Dangote subsidiary to fuel its operations.
This is good news for both Tanzania and Dangote’s cement factory; Moreso when the business guru plans to double Tanzania’s annual output of cement to 6 million tonnes.
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