State-run Tanzania Petroleum Development Corporation (TPDC) is currently in negotiations with Africa's richest man, Aliko Dangote (photo) as regards the supply of natural gas to the Dangote Cement factory in Tanzania.

The $500 million cement factory in the southeastern Tanzanian town of Mtwara, was established in 2015, with a yearly capacity of 3 million tonnes. The facility operates on expensive diesel generators and Dangote Cement had beforehand asked TPDC, to supply its Mtwara-based cement plant with natural gas at a low cost of which the state-run refinery turned down.

As a result, last week the company’s majority owner and chairman, Aliko Dangote, stopped production at the plant.

According to TPDC, talks were expected to be finalized in January, with price disagreements yet to be resolved, Reuters reports.

“Dangote has held protracted talks with TPDC on the pricing of natural gas. The Dangote Cement factory has asked for gas supply at below market prices, equivalent to the price of raw natural gas from producing wells. TPDC cannot sell natural gas (to final consumers) on at-the-well price because there are additional costs incurred in processing and transporting the gas,” TPDC said in a statement.

Tanzania in February discovered a further 2.17 trillion cubic feet (tcf) of possible natural gas deposits in an onshore field, thereby increasing overall estimated recoverable natural gas reserves to over 57 tcf.

Anita Fatunji