Nepal | April 04, 2020

Self-reliance in cement yet to benefit Nepalis

Himalayan News Service

Kathmandu, November 7

Though manufacturers claim that Nepal has become self-reliant in cement production from this fiscal, it is yet to benefit consumers as the price of cement still remains the same as in previous years.

Even statistics of Nepal Rastra Bank (NRB) show that domestic production has been substituting import of cement and the import of the product is nominal compared to past years. However, this import substitution has not benefitted consumers, as construction cost has remained the same as in previous years.

Yuba Raj Poudel, a Bhaktapur resident who is current constructing a new house, is purchasing cement at Rs 810 per sack. “The price of cement in the retail market is very uneven and high. While one retail shop charges Rs 810 per sack for OPC cement, the other seeks Rs 830 per sack. I don’t see any drop in cement price compared to the price of last year as I am into constructing the house since last one year itself,” he said.

Certainly, the cement industry is growing and the rise in production of clinker, the major ingredient for cement production, has helped decrease import of the raw material and finished product (cement) from India. NRB data show that Nepal imported Indian cement (including clinker) worth Rs 31 billion in fiscal 2017-18, which declined to almost Rs 13 billion in 2018-19.

In the first two months of this fiscal, the country imported cement worth only Rs 940 million, which cement manufacturers claim are for imports for which advance payment had already been made. As per them, import of cement and clinker from India is almost nil in the ongoing fiscal year.

Contractors have said that the high price of cement despite ample domestic production and import substitution is questionable.

“There is no change in price of domestic cement in the market despite the country becoming self-sustained in cement production. The price is the same as that of various other foreign brands of cement that were available in the market,” informed a contractor, seeking anonymity.

However, cement manufacturers claim that cement price has come down by at least 15 per cent over the last one-year period and is expected to drop further in the future.

“On average, the factory price of OPC cement today is around Rs 700 per sack, depending on the brand against its price of around Rs 750 per sack a year ago. Similarly, price of PPC cement has come down to Rs 600 per sack from Rs 700 per sack a year ago,” said Pashupati Murarka, director of Argakhanchi Cement.

Refuting that price of cement has not come down in recent months, Murarka said that if cement price is still the same in the market, then it must be due to retailers and wholesalers who have been keeping high profit margin.

If the manufacturers’ claim is anything to go by, consumer right activists said the government should effectively monitor the market and prevent arbitrary rise in cement price.

“It is good that the country has become self-reliant in cement. However, it has no meaning if the benefit does not trickle down to the consumers,” said Madhav Timalsina, president of Consumers’ Right Investigation Forum.

There are 50 cement plants operating in the country, while a dozen cement factories including Agrakhanchi Cement, Sonapur, Ghorahi, Subhashree Agni Cement, Hongshi Shivam Cement, Sarbotam Cement, Cosmos Cement and Maruti Cement, among others, produce clinker and supply it to other cement factories, thereby making the entire cement industry self-reliant.

Clinker is the major ingredient for cement production, with almost 85 per cent weightage in the entire cement production process.

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