By Uditha Jayasinghe
Around one million 50-kilo bags of cement need to be imported urgently to offset the current shortage say industry experts warning that scarcity and increase in price would hit Sri Lanka’s Rs.250 billion Construction Sector hard.
Ceylon Institute of Builders (CIOB) President Dr. Rohan Karunaratne told the Daily FT that if prices are increased, the contractors would have to take on the added costs.
“At the moment we can estimate that there are about Rs.1 billion worth of contracts being carried out. If the cement price increases then the additional expense will have to be borne by the contractor.”
If a price hike is approved by the Consumer Affairs Authority (CAA) there is a possibility that construction costs of contracts already given will increase as well as result in a shortage of new agreements.
“The imports by the government are inadequate. On average the government imports range around 200, 000 bags per month and this is even less than 20% of the required amount. We met with the Chairman of the Sri Lanka Cement Corporation on Tuesday morning and stressed that around 1 million bags are needed urgently to offset the shortage,” Dr. Karunaratne added.
Even though the Cement Corporation is willing to increase imports, Pakistan companies where a considerable portion of Sri Lanka’s cement imports come from, have more lucrative offers from other countries such as the UK.
Local producers Tokyo Cement and Holcim Lanka account for 50 to 60% of the supply whilst the rest is sourced via imports.
Dr. Karunaratne opined that unless these two large players that account for more than 50% of cement production increase their output to the market without a significant price increase the industry will suffer.
It was earlier reported that three cement companies had requested approval from the CAA to restore of previous maximum retail price of Rs. 785. So far the Government is less inclined to give in to this request but continue to maintain the reduced price of Rs. 750 per 50 kilo bag of cement. The Co-operatives is also at logger heads with Sri Lanka Standards for blocking its imported consignment of cement from Pakistan owing to inferior quality with Internal Trade and Cooperatives Minister Johnston Fernando charging that imports by private sector had been allowed.
Dr. Karunaratne lamented that this stalemate of events has made the situation “worse” for the industry.