Despite a boost in profit to 60 million Br during the recently ended fiscal year, Mugher Cement, the third biggest cement factory, is at the risk of closure due to the power disruption in its newly built cement grinding and packing plant at Tatek, 35Kms west of Addis Abeba.
Mugher, whose production capacity is around two million tonnes of cement, has produced 909,000tn of cement in the past fiscal year, 28pc more than the previous fiscal year.
“An increase in production and profit does not guarantee our future in the market,” Akalu G. Hiwot, who has been a general manager of the company for the past year, told Fortune.
“We cannot pay our liability unless we start operating at full capacity.”
Mugher completed the expansion of its plant at Tatek with a loan from the Commercial Bank of Ethiopia (CBE) three years ago. Although the company has paid some of its debts, it is yet to pay 1.2 billion Br for the Bank. Mugher’s plan is to pay 15 million Br every quarter.
“In addition to the debt, we are expected to pay an interest of 15 million Br, which is very difficult to fulfill considering our current capacity,” said Akalu.
“It is challenging to survive in such a situation.”
This, however, is unacceptable for a director at Chemical & Construction in puts Industry Development Institute.
“Shutting down such a big company is not an alternative,” the director, who wished to remain unnamed said. “The problem is temporary and can be fixed in discussion with the power generator wing.”
Constructed five years ago, the Tatek plant has a capacity to produce 105tns of cement hourly even though one of the grinding machines is not working due to frequent power blackouts.
The problem of repeated power disruption has been a major bottleneck for most factories. It is particularly acute in the case of cement manufacturers although Ethiopian Electric Power still claims there is no deficit.
“We have even paid the power provider 5.5 million Br to fix the power issues,” Akalu explained. “But, the problem is still recurring.”
The problem of electricity is not singular to Mugher.
“We are not able to produce as per our plan and target due to the power disruption,” said Mur Ti, a finance manager at ethio-cement. “It is even damaging our machines.”
Two months ago another giant cement manufacturer, Dangote Cement Industries PlC, announced the probability of a shutdown over a disagreement in management of a query.
Currently, there are 18 cement manufacturers in the country, of which 14 are active, producing over 8.4 million tonnes of cement in the country, where Dangote and Derba Cement Factories are major players in the industry.