The cost of transportation was one of the main issues addressed at the recent commissioning of the new US$ 120 million Hima cement plant extension. Chairman of the Lafarge group, Hussein Mansi, suggested that a railway line would both boost cement production and lower its cost.
Last year, the cost of locally produced cement averaged at Ushs 25 000/bag. The construction of a local railway would provide cheaper transportation and, in turn, a lower price for locally produced cement.
It is reported that local producers may continue to request the return of the common external tariff as a protection measure from the heavily subsidised imported cement.
Mansi said: “This uneven playing field coupled with the recent significant investments that ensure self sufficiency is the reason the regional cement producers have requested the EAC partner states to revert to the Common External Tariff of 35% or US$ 50/t.” He continued: “We need a railway line to connect us to the regional market for us to offer lower prices for our customers.”
As their initial capital expenditure, TransCentury and Citadel, which have purchased shares in Rift Valley Railways, will be restructuring the railway’s operations. The US$250 million investment would cover the upgrade of the entire train service.
However, operations are set to be delayed due to disagreements over who is actually in control.
Market experts also claim that poor roads and high energy costs could keep local cement at a disadvantage with imported cement. Uganda’s President, Yoweri Museveni, said: “We are working on the roads and the railway projects which will be complete in the next three years.” The investment is expected to fetch over US$ 140. The completion of the Bujagali power project next year will also lower energy prices, according to Museveni.
Read the article online at: https://www.worldcement.com/africa-middle-east/18012011/railway_needed_in_uganda_to_even_playing_field/