Page 122 - Volume 2_CHANGES_merged_with links

Ethiopia

Uncomfortable Truths

The Grand Ethiopian Renaissance Dam

(Author : Surplus Electricity = Positive control over Cash Flow,; Greater control over self-
development and Economic Freedom)

Ethiopia: Rolling Blackout Pinches Cement Industry
" The power rationing program that started in April is thwarting the productivity of the cement

industry.
The local cement manufacturing industry, which has been facing a myriad of challenges, has
been hard hit by the power shedding program the state power monopoly, Ethiopian Electric and

the Ministry of Water and Energy recently introduced.
As part of the power shedding program, the cement manufacturers are allowed to operate only

15 days in a month. The manufactures are lamenting that their production capacity is slashed
by 50 percent. Though their fixed costs have surged, the government has advised them not to

make price adjustments. Even though the cement manufactures did not make price
adjustment the price of cement has gone up in the local market. The price of a quintal of
cement which was 260 birr before the introduction of the power shedding program has jumped

by a whopping 60 percent to 410 birr. Last week a quintal of cement was sold at 350 birr-360
birr and this has increased to 410 birr this week.

Danilo Trugillo, Country Manager of Dangote Cement Ethiopia PLC, told The Reporter that his
plant is working only 15 days. "We work for 15 days and stop for 15 days. The direct impact is

we have cut our production by 50 percent," Trugillo said.
Trugillo explains that as cement production is a continuous process when plant resumes
production it cannot reach the high performance immediately. "When you stop you have to stop

it gradually. The impact on our company is 60 percent meaning we are utilizing only 40 percent
of the plant production capacity," Trugillo said. "This is really a big challenge for me," he added.

According to him, the Dangote Cement plant was producing 200,000 tons of cement every
month but this has dropped to 103,000 tons in the aftermath of the power crisis. "We have a
huge fixed cost. We have to pay back loan from our mother company in Nigeria. In addition,

here, we have 2,000 workers. It really hurts us," he lamented.
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In the wake of the power rationing, the price of retail price of cement has been galloping
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Transporters spend up to seven days at the cement factories waiting for adequate cement
cargo. And they include this cost on the transport price.

***