Ethiopia’s largest cement manufacturer, Mugher Cement Enterprise, has decided on Friday, December 22, 2006, to increase its wholesale price by 25 per cent, pushing cement to Br135 in its distribution centre in the capital and Br125 from the factory, located 105Km north west of Addis Abeba.
The latest increase came at a time where the high demand of cement created a rapidly fluctuating price in the capital and across the country. It also came following the importation of cement from aboard.
Mugher’s General Manager, Tefera Abebe, told Fortune the decision to increase the wholesale price was influenced by two factors: an increase in the international oil price and the Enterprise’s plan to expand its production line to produce almost twice the volume of its current production capacity. The main plant installed in the mid 1980s has two production lines, commissioned in 1984 and in 1990.
The state owned Mugher has entered into a deal with the Chinese Sinoma International in the first week of December 2006, to install a third production line; projected to consume Br1.4 billion investment, the third line will have production capacity of 1.4 million tonnes of cement a year. The production line is expected to take 21 months to be completed.
Current demand has a larger appetite than what the three factories operating in the country - Mugher, Messebo and Dire Dawa - can satisfy. According to studies conducted by the Ministry of Trade and Industry, current demand is estimated to reach three million tonnes, while the three factories are limited to produce half that volume.
The gap is filled by three companies - Salani Construction, A and G Global Trade and Construction, Jazz Trading - who have imported 100,000t of cement from Egypt and Europe, according to reliable sources from the Ministry. It is, however, the latter two that are supplying the market, while Salani is using the cement it has imported for its own projects.
These imports have helped to offset the increase in cement prices that nearly thwarted the growth of the construction industry and affected general economic activities, particularly in the capital. Following the importation of portland cement from Egypt, which was offered between Br 177 to Br180, has contributed price from Mugher to decline by Br 30 to Br 220 and from Messebo to go down to Br 200, according to market surveys.