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Govt urged to reduce cost of power to increase competitiveness



Bamburi Cement company is calling on the government to reduce the cost of power by 50 percent to USD 9cts/Kwh a move that will effectively increase competitiveness of manufacturers as well as drive affordable housing.

The company said that power cost in cement manufacture accounts for a significant proportion of total inputs and that a 50% reduction will bring down the overall end user price.

Further, the manufacturer urged the government to zero rate cement tax especially for cement meant for Affordable Housing projects.

Speaking during a forum that brought together the country’s middle to large contractors, the private sector and government officials, Bamburi Cement Board Chairman Dr. John Simba said that the company has been reviewing various options to provide the much-needed savings towards the country’s overall Affordable Housing agenda.

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“Cement in a typical high-rise residential building contributes approximately 10% of the total construction cost and a reduction in the cost of power and zero-rating tax on the commodity will significantly reduce the overall construction cost,” said Mr. Simba.

Bamburi Cement Chief Executive Officer, Mr. Seddiq Hassani added that Bamburi Cement appreciates the continued government’s support to the manufacturing sector’s growth and development and pledged the firm’s support to the government’s Big Four Agenda in which the sector is expected to contribute 15% of the Gross Domestic (GDP) by 2022.

“Our Affordable Housing solution dubbed “Maskani” is an initiative with social impact that meets the housing needs of families. Since 2016 when Bamburi piloted the programme in various parts of the country, at least 5,000 households have benefited from it. Our ambition is to reach 20,000 households by 2020.” Said Hassani.

The company’s “Maskani” offering assists individual home builders to construct their home and achieve affordability through the provision of architectural designs, accompanying bill of quantities, schedule of materials and onsite technical assistance. The initiative covers residential and mass housing construction. In addition, as part of the solution, Bamburi is able to link borrowers to the firm’s network of reliable and convenient retailers of building materials as well as provide access to alternative construction technologies like encouraging the use of stabilized soil bricks for peri urban and rural housing.

Mr. Hassani added that the company is keen to support the government’s Affordable Housing agenda and contribute to national development and hence the rationale for the tax and power cost reduction proposals.

“If these proposals are implemented, it will translate to a significant saving in cement costs and the same can then be passed on to consumers and ultimately support the government’s Affordable Housing agenda.” Continued Hassani

Also speaking during the same forum, the Principal Secretary, State Department for Housing and Urban Development, Ministry of Transport, Infrastructure, Housing and Urban Development Mr. Charles Hinga encouraged local contractors, raw material suppliers and jua kali artisans to innovate their business processes and explore ways in which the cost of construction can be reduced.

“We have proposed a raft of amendments to various pieces of legislation to create an impetus for Affordable Housing delivery. Some of these amendments include stamp duty Act, Income Tax Act and Sectional Properties Act, among others.” Said PS Hinga.

Bamburi recently announced completion of its Athi River Plant capacity expansion project which saw it construct a new Shs 4billion production line, injecting additional production capacity of 900,000 metric tons per year to increase total capacity at the Plant to 2.4 million metric tons per annum.

Overall, the annual combined total capacity of Bamburi cement’s two plants (NGP and Mombasa) will increase to 3.2 million metric tons a year.