Cement retail prices have reached a record high of sh25,000 per bag, the first in several years due to the booming construction industry.
But exports to South Sudan, where there are urgent rehabilitation works after the region returned to peace and stability are also to blame. Other export destinations include Rwanda, Burundi and the DR Congo.
Cement has been selling between sh18,800 and sh20,000 since the beginning of the year.
The only two cement manufacturers, Tororo and Hima, do not have capacity to satisfy the local demand.
They have been forced to cut exports to cater for the local demand.
“We have reduced exports by 90% because the local market comes first. The demand is quite high and this influences the price especially at the retail level,” said BM Gagrani, the Tororo Cement general manager.
Tororo Cement produces about 19,000 tonnes per day against installed capacity of 35,000 tonnes due to high production costs caused by power cuts, Gagrani explained.
At both the Tororo and Hima plants, machines run 24-hours but the output is still low to quench the demand resulting from the construction of residential houses and hotels and roads in preparation for the Commonwealth Heads of Government Meeting (CHOGM) in Kampala in November.
Cement manufacturers disclosed that they had initiated expansion plans to counter the skyrocketing demand.
“The demand has been growing at an average of between 7 and 9% boosted by the construction ahead of CHOGM. We are finalising arrangements to expand our production,” said David Njoroge, the Hima Cement chief.
Hima produces about 300,000tpa but it plans an additional 480,000 when a new plant starts production in 2009 at the Namanve Industrial Park, near Kampala.
The firm is investing $93m (about sh158b) in the project, which also involves the expansion of the Hima plant in Kasese.
Tororo Cement has an annual capacity of 900,000 tonnes but it is operating at only 50%.
“The availability of limestone; the main raw material is limited. But we are optimistic that with the East African integration, all inputs will move freely to reduce the imbalances,” Gragrani said.
He noted that the future of the industry was bright due to the possibility of additional power and oil.