Tanzanian Plant to Switch to Gas 'Soon'

Tanzania's biggest cement maker says it has temporarily closed its diesel-fired plant in the south of the country to facilitate work that will lead to its long-delayed switch to natural gas. The plant is understood to have been closed for the past one or two weeks.

Dangote Cement Industries' head of corporate communications Carl Franklin told NGW: "Gas turbines [are] expected [to be running] later this month or April." The factory, which can produce 3mn tons a year of cement, is at Mtwara, 400km south of the capital Dar es Salaam. The $500mn plant, commissioned in December 2015 and owned by Nigeria and Africa's richest man Aliko Dangote, has been hampered by high diesel costs - hence its planned conversion to natural gas.

The plant's management and Tanzanian president John Magufuli have been discussing ways for the past two years for it to switch to a cheaper energy source. But in December 2016 talks hit a snag with state-owned Tanzania Petroleum Development Corporation (TPDC) saying that the Dangote Cement factory wanted to buy natural gas at a price equivalent to the wellhead price, without any inclusion of processing and transportation costs. At about that same time, the cement manufacturer suspended production, citing high diesel costs of about $4mn/yr, but reopened after a few weeks.  Previously, its power plant ran on coal imported from South Africa but was left in limbo after the government banned coal imports, insisting that local output be used. 

In half-year results in August 2017, Dangote announced it would invest $90mn to build a gas-fired power plant, supplied with gas bought from TPDC at a negotiated price. The power plant was supposed to have started generating in September 2017, but failed to meet the timeline, and in Dangote's December 2017 earnings, the company said the switch would be achieved in March 2018.

So the latest 'temporary' closure of the diesel-fired plant was met with a social media frenzy with Tanzanians speculating that yet another dispute over the price of gas had caused the glitch. “It is closed for scheduled maintenance. The kiln is being relined (this happens twice a year) and that usually takes 12-14 days, during which time we conduct other maintenance,” Franklin was quoted by the Tanzania Daily News in a separate interview on March 21. “As to the energy costs, we have been using temporary diesel generators to power the plant and this has a high cost. We are replacing them with gas turbines this month and that will stem these losses. If you look through previous results statements in 2017, you will see we have described this problem several times quite openly.”

Reports say gas would be supplied "from a nearby field" but do not specify if from the small producing Mnazi Bay field - the likely source - or the planned Ntorya field development that could take over a year to start up.