A sister company of the Eastern Industry Zone, East Cement SC, which was established some six years ago and had commenced operations four years ago to produce some 2,000 tons of cement and 1,500 tons of clinkers has said that it has limited its production because of shortages of electric power supply.
Making matters worse, the interruptions are making it difficult to be engaged in the business of cement making, according to Wei Watao, deputy general manager of East Cement factory located at the North of Addis, some 100 km away and near to Fiche town. East Cement has two production lines Portland Pozzolana Cement (PPC) and Ordinary Portland Cement (OPC), for the latter, the factory says it will bump on massive production. However, the factory is forced to switch production lines at a time due to power shortage.
Watao told The Reporter that the factory has settled a payment of some 60 million birr to have a special electric power line stretching from the Sululta substation, some 20 km north of Addis. By November, the special lines are expected to reach the factory gates with 12 MW.
Out of the existing 18 cement factories, East Cement has been favored with few others to supply for the construction of the Addis Ababa Light Railway project. Previously, the factory was supplying building materials for the construction of the African Union Commission headquarters. Yet, East Cement remains to be one of the smallest factories with annual production capacity less than 730,000 tons. OPC is mainly used for huge construction activities and for which East Cement bids for major state-owned projects.
According to Matao, the existing price, together with the power cut and fluctuation, has made Ethiopia less favorable for the cement industry. Two years ago, following the surge in production in Ethiopia, factories like East Cement were looking to tap into neighboring markets, particularly the South Sudan market. However, the poorly conditioned roads to the other side forced both the Chinese and factories like Mugher Cement to halt exports. Accordingly, the growing production and the decreasing price for cement forced mini-factories to cease production and close down. Operations costs and production capacity and the current state of technology are some of the reasons for mini and small factories to be forced to be kicked out of the industry. For some like Watao, it is the increasing production and the declining price of cement which is playing the central role.
According to the recent study made by the Nigeria-based Eco bank, Ethiopia stood third next to Nigeria and South Africa for leading in cement production in 2013 in sub-Saharan Africa. Eco bank noted that Ethiopia produces some 12.6 million metric tons per year. The demand for cement has also been said increasing, registering six million metric tons or 61 kg of per capita consumption. However, the government in its five-year economic plan stipulated that the current total production to reach some 27 million tons and the per capita consumption to reach at 300 kg by the end of 2015.
East Cement has made some 1.8 billion birr capital investment. Currently, East Cement is finalizing to fulfill the natural coal usage instead of using heavy fuel oil for the clinker production.
The Chinese government owns 40 percent stake of the Eastern Industry Zone, located at Dukem town, 40 km east of Addis. The owners are planning to build a giant, five-star rated hotel, according to information obtained from Bizualem-Kids general trading – the exclusive agent and transporter of East Cement. Now, top officials of the Eastern Industry Zone are in town bidding to acquire land.
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