Nov 23, 2017: Dangote Cement has started using its own gas-powered plant in Tanzania to reduce its reliance on diesel gensets and reduce its operational costs.

The firm has previously run into trouble with President John Magufuli’s administration over tax on diesel imports to run its Mtwara Cement plant, and the government’s ban on coal imports.

This made the cement manufacturer to suspend its operations in December of 2016, citing technical problems and high production costs.

Now, in its first half-year results, Dangote says that it has invested US$90 million in the construction of the coal/gas-fired power station to be fed with natural gas at a negotiated rate by the Tanzania Petroleum Development Corporation.

Dangote announced that the Mtwara plant increased volumes by more than 64% to nearly 388 000 tonnes in the first half of 2017, pushing the six months sales to more than 400 000 tonnes.

“The factory had to rely on diesel generators, which results in net income losses that weigh on our operations outside of Nigeria,” the firm said.

With the installation of gas turbines since September, that has brought profitability into the plant.

From the negotiated talks between the firm’s owner Aliko Dangote and President Magufuli, the cement maker was allocated land to mine coal to fuel the plant in the coming years.

In August 2016, Tanzania banned the importation of coal, insisting on use of its own Coal. Dangote Cement used to import its coal from South Africa at a cost of US$103 per tonne. Dar said that its coal was selling at as a low as US$90.

The firm is now banking on the construction of the Dar es Salaam-Morogoro standard gauge railway and the construction boom in the administrative capital Dodoma to accommodate government departments to boost its second half earnings.