Dangote Cement operations in Tanzania is currently facing a tough time as it battles with skyrocketing diesel costs. The company has been operating its 3 million metric tonnes Cement Plant with diesel for some time and has solicited the help of the Tanzanian Government to provide it with Gas, which is considered cheaper.
Dangote Cement and State Run Tanzania Petroleum Development Corporation (TPDC) are still haggling pricing which has left the company with no choice but to shut down the plant albeit temporarily.
According to State-run Tanzania Petroleum Development Corporation (TPDC), talks were expected to be finalised in January.
“Dangote has held protracted talks with TPDC on the pricing of natural gas. The Dangote Cement factory has asked for gas supply at below market prices, equivalent to the price of raw natural gas from producing wells,” TPDC said in a statement.
“TPDC cannot sell natural gas (to final consumers) on at-the-well price because there are additional costs incurred in processing and transporting the gas,”
Despite these challenges Dangote Cement share price on the Nigerian Stock Exchange remained unaffected as investors appeared unfazed by the challenges.
The share price has remained largely flat in the last 5 trading days losing just 1.1%. Dangote Cement’s gross profit margin for the 9 months ended September 2016 was 47.5% down significantly when compared to the 62% it churned out same time last year.