TANGA, TWIGA CEMENT MERGER: Why govt okays merge

THE government has assured the public that it will not allow the shutdown of Tanga Cement because the company carries a lot of interest for the state.

“The government will not allow the merging between Twiga Cement and Tanga Cement to lead to the shutdown of the latter,”   Minister for Finance and Planning Dr Mwingulu Nchemba told the august House on Friday.

Dr Nchemba made the assurance when responding to queries by several legislators on the acquisition of Tanga Cement by Twiga Cement, saying that it is a very sensitive issue because the government itself has a lot of interest in the cement factory.

He said that because 68 percent of the factory belongs to Afrisam Mauritius and the rest owned by the government and public institutions, the government is determined to make sure that the issue is handled with utmost care.

“I know most of the legislators are worried that maybe the factory will be sold and put to ground, but I am here to assure you that it will never happen because it carries a lot of interest for the government and Tanzanians,” assured the minister.

Dr Nchemba said that if they allow that to happen, then it means the government will be left with the responsibility of bearing the consequences.

He said that apart from employment, there are public institutions which have invested in the factory, saying even if it is merged with Twiga Cement, they will not allow them to terminate the factory.

The minister  said that as it stands, the cash flow of Tanga Cement stands at negative 11bn/-, that is why they are unable to continue with operations, saying that apart from that, the cement company has a debt of 203 bn/- and an overdraft of more than 19bn/-.

“If you look at these figures, even if someone is willing to revive the factory, it means they must have some serious financial muscles to be able to do so,” said the Finance Minister.

He said the company is in a critical condition, adding that it really needs a strong entity to pull it, which is why all the processes have been done to rescue the situation.

He told legislators that the tug of war that is going on is not healthy for the country, because it might end up discouraging other investors from investing in the country.

Minister of Investment, Industry and Trade, Dr Ashatu Kijaji, on the other hand, said that they received report stating that Twiga Cement was bankrupt.

“About six years ago after receiving the bankruptcy  report, we summoned the investor so that we could sit  down and chart the way forward, but they never turned up, but as we speak the investor has shown up and we are still negotiating because they still have contracts with us which must be respected,” she said.

The minister further told Parliament that Chalinze Cement which went to court to object the Tanga/Twiga merger was deregistered by the Company Registrar because of issuing false reports.

She said the Registrar has the mandate to deregister any company in Tanzania if the office is satisfied that there are some irregularities in their reports, and that is exactly what happened.

The minister said that the Registrar proved that Chalinze Cement Company provided false reports, including issuing a non-existent address, false report on the addresses of shareholders of the company and a fake telephone number.

“According to the law of the land, the Registrar issued a 30-day notice to the directors in January 19,, 2023 to come up with a detailed explanation on the irregularities and why the company should not be removed from the Registrar’s book ,” she said.

The minister said that the directors did not respond to the notice, that is why after the expiry of the notice, the Registrar had no option but to deregister the company.

“We need investors but those who are committed and have good intention with our country,” she said.

She further said that her ministry is ready to organise training to the Members of Parliament on the Fair Competition Commission (FCC) and Fair Competition Tribunal (FCT) so that they can all understand how they operate.

The minister hinted on the idea of organising the seminar   after 50 percent of legislators who contributed in the budget estimates of her ministry touched on the issue, demanding to know why FCC allowed the merger of Twiga Cement and Tanga Cement even after FCT had stopped the exercise.

“FCC did not involve itself with the request of the merger between the two companies which was stopped by FCT, but what happened is that on the 22nd of December 2022 Scancem International DA which has 69. 29 percent at Twiga Cement announced their intention of buying 68.33 of Afrisam Mauritius shares at the Tanga Cement,” said the minister.

She said all the lawful procedures were followed in going through the request for the merge.

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