Tanga Cement: MPs demand Prime Minister’s explanation

 

Singida West MP, Elibariki Kingu debates the Prime Minister’s Office’s budget in Dodoma yesterday. He was one of those legislators wanted the Prime Minister Kassim Majaliwa to answer queries regarding the Tanga Cement row. PHOTO | MERCIFUL MUNUO

Summary

·         Fair Competition Commission (FCC) had initially approved the proposed Sh137.33 billion merger but Fair Competition Tribunal (FCT) quashed the planned merger

Dodoma. Legislators yesterday expressed concern and demanded solid answers from the

Prime Minister on why the Fair Competition Commission (FCC) has failed to honour the decision by Fair Competition Tribunal (FCT) on the planned merger between Twiga Cement and Tanga Cement.

The issue in question dates back to October 2021 when Scancem International DA (Scancem) – a subsidiary of Heidelberg Cement AG, which owns Tanzania Portland Cement Plc (Twiga Cement) – and AfriSam Mauritius Investment Holdings Limited, owner of Tanga Cement, issued a joint statement that they had finalised the terms upon which the former would acquire a 68.33 percent stake in Tanga Cement.

FCC had initially approved the proposed Sh137.33 billion takeover with the caveat that the acquiring firm should not shut down Tanga Cement operations; that it should continue to produce and promote the Simba Cement (Tanga Cement) brand, and that it should not lay off Tanga Cement’s existing employees.

However, that did not go down well with some industry players who were opposed to the decision on the grounds that allowing the merger would prevent, restrict, or distort competition in the market, contrary to the Fair Competition Act, 2003.

Chalinze Cement Company Limited and the Tanzania Consumer Advocacy Society (TCAS) lodged an appeal with the FCT, which quashed the planned merger through its verdict delivered on September 23, 2022.

The judgment by the quasi-judicial FCT, delivered by Lady Justice Salma Maghimbi, Dr Godwill Wanga and Mr Boniface Nyamo-Hanga, said in part, “Pursuant to the provisions of Section 11 (1) of the FCA (Fair Competition Act), having quashed and set aside the decision of FCC, the Tribunal prohibits the merger between Scancem International DA and Tanga Cement.”

But in an interesting turn of the event, on February 11, 2023 the FCC placed an advertisement in which it said it had begun reviewing and investigating afresh Scancem International DA’s intention to acquire control of Tanga Cement Plc.

It is this turn of events that MPs, who debated the budget of the Prime Minister’s Office for the fiscal year 2023/24 yesterday demanded that Prime Minister Kassim Majaliwa should come up with answers on the matter when he winds up the debate today.

Mr Cecil Mwambe (Ndanda – CCM) had earlier tried to raise a point of order under the parliamentary standing order number 76, questioning the acquisitions saying the buyer will have an accumulative market share of over 65 percent.

“With such power, Twiga Cement is likely to determine and control cement price in the market. While FCT had already ruled on the matter by quashing the planned merger, it seems the buyer still has got an interest to proceed with the purchase hence pushing for it,” he explained.

Mr Mwambe added: “If the government will allow this process, then it will automatically increase inflation on construction items yet we have been fighting to reduce the same. Therefore, I need the government to respond - why is this happening?”

Mr David Kihenzile (Mufundi South – CCM) who chaired the session dismissed the raised point of order saying it never matched to the quoted standing orders. Moreover, he said: “The matter is of public interest therefore, the government should respond back to the parliament after processing the matter in question.

But Ms Salome Makamba (CCM – Special Seats) said: “When it comes to the matter of improving business environments in the country, the sale shouldn’t be allowed.”

The MP was of the view that the matter had been already ruled out and that there was no way for the FCC to push for it.

“Where did they (FCC) get such powers? The law clearly stipulates that in such an incident where a company is interested in purchasing another company of the same nature, then the purchased shares shouldn’t exceed 35 percent of the market share,” she questioned.

Adding: “The current proposal will allow the owners of Twiga Cement to increase their market shares to over 68 percent. This is against the law something has to be done to protect consumers and the country because having one company determining the price of a commodity is dangerous to the economy.”

The Singida West legislator Elibariki Kingu queried why the study findings on the matter, as directed last year by Mr Majaliwa, were not made public, pointing an accusing finger at some dishonest public servants for hiding them.

“Last year, the Prime minister commissioned a study on the matter. It was done by our fellow and patriotic Tanzanians but some big shorts in the government do not want it made public. They should release it. It has everything that people ought to know regarding the cement cartel that are pushing for the merger,” he observed adding: “We need some answers as this will create a market monopoly which is actually against the law.”