Bamburi Cement plans to increase its production capacity from 2.3 million metric tonnes to 3.3 million metric tonnes in order to meet market demand, in a move likely to spark price wars in the industry.
The increment, set to take place in the Athi River plant, is in addition to 0.8 million tonnes installed capacity in the Mombasa plant.
“We want to ensure our production capacity meets growth in the industry hence the decision to increase our produce,” said Bamburi’s technical projects manager Julius Induswe.
Addressing reporters during the Great Energy Debate in Nairobi, Induse said the firm has already invested Sh4 billion towards the project.
The quantity of cement produced in the country rose from 509,977 metric tonnes in February 2017 to 556,883 metric tonnes in March 2017 according to the latest government data.
The Kenya National Bureau of Statistics noted that the consumption of cement increased from 478,713 metric tonnes in February 2017 to 548,965 metric tonnes in March 2017.
Presently, a 50 kilogram bag of cement retails at Sh600 as sold by dealers in major towns, down from Sh750 in 2008-2009.
Increased production is likely to bring down cost and spark price wars among competitors. According to the 2016 AIB Capital Cement Sector Report, cement consumption in Kenya grew at a compound annual growth rate of 13.4 per cent from between 2009-2015, with the main demand driver being housing construction.
However, the report indicates that infrastructure demand is significantly increasing as the region seeks to plug its infrastructural gap.
To bridge this gap, Kenya is expected to spend $22.8 billion (Sh2.28 trillion), as compared to Tanzania’s $13.5 billion (Sh1.35 trillion), Uganda $12 billion (Sh1.24 trillion) and Rwanda $2.49 billion ( Sh2.49 trillion ) on infrastructure before fiscal year 2017-2018.
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