BY HIZKEL HAILU
Cement is the backbone of investment. Public and private investments are supposed to be delayed, interrupted and even stopped due to cement shortages. On the contrary, if there is enough cement supply; investments will take a short time to be completed unlike some other internal and external constraints among the owners of the investments.
Therefore, the shortage of chemical and construction inputs will directly and or indirectly harm the country’s economy. The demand for cement is growing exponentially. Subsequently, there must be supply as needed. Construction of everything in Ethiopia from one of the mega projects which is the construction of the GERD to the small individual houses requires significant construction resources. In order to meet this demand, cement factories have been invested in various parts of the country.
Responding to the Member of Parliament on the Ethiopian House of Peoples’ Representatives 11th Regular meeting Prime Minister Abiy Ahmed (Ph.D.) has stated that the government is working exhaustively in order to solve the problems relating to the construction industries.
As to him, three very large companies are on the way to engage in the production of cement. Now they are buying a machine. Accordingly, the country will double its cement production capacity while these three companies start their operation soon. Mentioning that it was possible to bring significant change in exploiting the potential of the existing cement factories in Ethiopia, the premier argues investors should engage in the sector actively.
According to Samuel Halala, Director-General of Chemical and Construction Inputs Industry Development Institute, cement factories in Ethiopia have a production capacity of 350,000 to 380,000 quintals per a day. However, shortcomings in the sector have not been reduced.
He further said that the main problem with cement is the mismatch between supply and demand. Lack of supply in cement production and productivity is an incongruity in demand. Construction work is also on the rise due to the country’s rapid economic growth.
Demand for cement has grown significantly as public and private construction projects have grown exponentially, especially in line with the strategy of the reformist government to complete projects. On the other hand, since March 2020, lack of spare parts and shortage of fabrics inputs were happened among the factories due to lack of foreign exchange, he added.
In addition to such problems, the Derba Cement Factory suffered damage in March 2020 while it was into annual maintenance. As a result of the damage, the Derba Cement Factory has not been able to reach full capacity until the last week. The factory was operating in a fragmented manner for the past months.
As to him, there were also landslides and cracks in other cement factories, such as Mugher, Dangote, as well as Derba. This caused problems for their cargo belts, which carried the main input for the cement factories. In addition, there has been a significant reduction in the supply of cement.
To prevent this, the Ministry of Trade and Industry and other stakeholders have conducted a comprehensive study and submitted to the government. Accordingly, efforts have been made to increase the production capacity of cement factories to 85 percent since November 2020. However, most industries could not reach 85 percent production capacity even if such a million dollars were allocated for the sector.
According to Samuel, the damage occurred at the Derba, East and Mugher cement factories coupled with the time it took for repairing and maintaining these factories are the major of the reasons that have created a gap in the market.
However, Mugher and Derba Cement factories have been in production since the month of March. Derba produced and brought about 63,000 quintals of cement to the market before two weeks within a day. Mugher is similarly working to produce 40,000 quintals per a day. The problems faced by the factories are also being solved step by step.
Mesobo Cement Factory left the Ethiopian market in 2020, and after law enforcement, the factory’s cars were dispersed. About 40 of the vehicles that were dispersed were recovered.
Recently, Chemical and Construction Inputs Industry Development Institute has conducted a discussion on the comparative inspection report held on cement and paint industries in order to solve the problem phased by the industries. Upon it, 9 of the cement industries and 10 of the paint industries participated in the inspection.
In her opening remarks, Simret Girma, Deputy Director of the Institute’s Investment Marketing and Technical Sector, said the audit will be conducted annually to build the capacity of industries and enable them to be competitive in terms of price and quality.
It is a demonstration to improve the potential of the industries through increasing the quality and quantity of their products as well as the discussion and the inspection are also significant for the industries for indicating what needs to be addressed in the future, he added.
According to the director, all the industries should participate in the inspection as it is designed to build the capacity of the industries to make their products competitive parallel with allowing the experienced industry to share its experience with others and fill the gaps.
Dangote has been producing regularly in recent weeks. All of Dangote’s products have been sold in Addis Ababa. Based on this small product, it was being sold at an unfair price. However, now that other cement factories are starting to produce and Derba has been producing 60,000 quintals per a day for the last three weeks.
Of course since last week, the supply has increased to 300,000 quintals per day and the price has also improved. He explained that they are working hard to stimulate the market better than before.
The total number of industries in Ethiopia has a production capacity of 350,000 to 380,000 quintals per day. The director general also said that the government is working to ensure that the distribution is not disrupted.
Meanwhile, the ministry of trade this week has revealed that Mesebo Cement Factory has started its operation since last week. Minister of Trade and Industry, Melaku Alebel, said the Mesebo Cement Factory in Tigray State, which has been shut down for the past four months due to the law enforcement campaign, has started production.
According to the Minister, the price of a quintal of cement in Addis Ababa has dropped to 420 Birr due to the economic malpractice of illegal brokers in Addis Ababa. Melaku further elucidated that the ongoing efforts to increase the volume of cement production in all parts of the country have yielded encouraging results.
He said the return of Mesebo Cement to production will have a positive impact on the price increase. He urged all Ethiopians to play their part in the price improvement.
Confirming that the company has started supplying products to stabilize the cement market, the minister further noted that while cement prices had spiked in recent weeks, following measures taken by the Ministry of Trade, the price has fallen to ETB 420/100kg (US$10.14) from ETB 600 in Addis Ababa.
The Ethiopian Herald March 26/2021
