Monday, May 20, 2024
BusinessForex crunch stifles Mugher Cement productivity

Forex crunch stifles Mugher Cement productivity

The pioneer cement producer, Mugher Cement, disclosed that shortage of foreign currency is affecting its productivity.

Akalu Gebrehiwot


Akalu Gebrehiwot, general manager Mugher Cement Factory, told The Reporter that shortage of foreign currency is thwarting the productivity of the factory. According to Akalu, Mugher Cement Factory, which has been a major player in the local construction industry, annually needs three million dollars for the procurement of spare parts for the cement plant. However, he said the Commercial Bank of Ethiopia and the National bank of Ethiopia could not allocate more than USD 500,000 due to shortage of foreign currency the country is facing at the moment.

“Every year, among others, we buy clay bricks for rotary kiln which burns the limestone at 1,450 degree. There are a couple of factories known for the production of the clay bricks, a critical instrument to run the rotary kiln. If we do not have the clay bricks we can not produce clinker if there is no clinker there is no cement,” Akalu said. Mugher buys clay bricks from Austria and Germany.  

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Akalu said although Mugher Cement needs three million dollars for the purchase of clay bricks and other spare parts in 2018 it secured only USD 500,000 and this year it got only USD 400,000. “Last year we allocated the USD 500,000 for the purchase of only clay bricks and we could not buy other spare parts. This year we bought clay bricks for USD 300,000 and allocated USD 100,000 for other spare parts purchase,” Akalu said. “This is seriously affecting our productivity,” he added.

Cement industries conduct annual maintenance that requires a large number of spare parts that are used to overhaul the cement manufacturing machineries. “In the last two years we are using old stock and under take some modifications,” Akalu said. According to him though, Mugher Cement Factory has the capacity to produce 1.7 million tons of cement per year it is able to produce only 1.2 million tons of cement.

The management of Mugher Cement is holding series of discussions with officials the Commercial Bank of Ethiopia and the National Bank of Ethiopia. “We explain to them the challenges we are facing and they understand our problems but it is a national problem that we all are trying to resolve. We will continue closely working with the banks to look for solutions,” Akalu said. 

In addition to the forex crunch the power rationing has affected the factory’s productivity in the fourth quarter. “These factors affected the productivity of the cement factories. As the result the price of cement has soared.”

Mugher Cement Factory was built in 1984 by the former military government in West Shewa zone, Adaberga Wereda near Mugher town, 90 km west of Addis Ababa. The factory undertook two major expansion projects in 1989 and 2007 that boosted the production capacity significantly.     

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