Cement Assoc told to review price hike

April 07, 2017

The Kathmandu Post, 7th April 2017, Kathmandu

Cement factories has hiked up prices of cement by Rs20 to 25 per sack, prompting Industry Minister Nagendra Raj Joshi to summon the Cement Manufacturers Association for a price review discussion. The increase in prices were due to rising import cost of clinkers and coals, according to the cement factories.

The price hikes come at a time when reconstruction works are ongoing and require large amounts of construction materials. “The minister urged the association to review the decision of price hikes at a time when the country is headed towards reconstruction,” a statement issued by Joshi’s secretariat reads.

Dhurba Thapa, president of the association, said they were forced to increase prices following the rise in cost of raw materials and import fees.

Price of cement had increased by Rs100 per sack last year. Although the cost of cement production has dropped due to smooth supply of electricity, rising costs of raw materials such as clinkers and coals that have to be imported, was the main reason of the price hike. 

Domestic cement manufacturers are dependent on clinker imported from India, while coals are imported from Indonesia and South Africa. Nearly 30 percent of the clinker is imported from India.

A rough estimate shows demand for over 5 million tonnes of cement in the country every year. Domestic industries contribute to around 80 percent of the total demand, while the rest is imported from India. 

According to the Trade and Export Promotion Centre, Nepal imported clinker worth Rs8.97 billion in the first six months of the current fiscal year. The figure jumped nearly six-fold, from Rs1.52 billion in the same period during the 2015-16 fiscal year. 

Apart from increases to the prices of raw materials, shipping costs has gone up as well. “Due to the unavailability of railways, importers are compelled to use trucks. This impacts the price of import,” said Thapa, adding that the only thing that has relieved the cement industry in recent days is the reduction in power outage hours.

According to the data of Home Ministry, the 2015 earthquake completely destroyed 608,155 homes, while 298,998 homes were partially damaged. Nepal sustained losses estimated at $7 billion during the earthquake. 

The ‘Post Disaster Needs Assessment’ report states that the country requires $6.67 billion for reconstruction.