KATHMANDU, Jan 24: Owners of cement industries have claimed that cement prices have not been hiked exorbitantly but adjusted according to the production cost involved. Organizing a press conference in the capital on Friday, Nepal Cement Manufacturers’ Association (NCMA) clarified that there was no cartelling in the prices of cement.
NCMA Chairman Raghu Nandan Maru said that the industries independently determine the price of their products and that the allegation of cartelling was baseless. “We have not fixed the price of cement like the way Federation of Nepal Gold and Silver Dealers Association fixes the price of gold and silver and the Nepal Bankers Association fixes the interest rate on loans. We are not involved in carteling,” he said.
Maru also attributed the decline in production to a drop in demand while the rise in price of cement is linked to the increased production cost due to power cuts. “There is no basis for alleging that prices were hiked arbitrarily. Production has decreased due to load shedding. We have not deliberately stopped production. The cost of running generators has increased excessively. Demand has declined due to lack of development expenditure. No one has been told to reduce production. No one has been told to increase the price and then sell,’ he argued.
The Public Accounts Committee (PAC) under the House of Representatives had on Wednesday directed the Ministry of Industry, Commerce and Supplies to immediately control prices. The Federation of Contractors’ Association of Nepal had filed a complaint with the committee alleging that industrialists had formed a cartel and increased the price of cement from Rs 400 per bag in Shrawan (mid-July to mid-August) to over Rs 800 at present.
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The industrialists said that they did not impose the high prices claimed by the FCAN but acknowledged a slight increase in selling prices due to rising costs, which they could no longer absorb. "Out of a total of 65 cement industries, 22 have been completely closed due to huge losses and are unable to make a profit," said Maru.
"We would also like to inform you that other industries are also facing closure due to the economic crisis. Due to this difficult situation, cement industries are unable to operate their business for an extended period at a loss. So, we have increased the selling price of our products in the past few months to cover the minimum production cost to pay the interest and installments on loans."
The NCMA has agreed that the cement sale price should not increase by more than Rs 115 per bag compared to the price in mid-July. Chairman Maru said that after discussions with the Minister of Industry and considering the interests of consumers, all industrialists agreed to cap the price with a maximum increase of Rs 115.
“Considering geographical and commercial conditions, a letter has been sent to all member industries to ensure the sale price does not exceed Rs 115 per bag (excluding VAT) compared to the price in mid-July,” he said.
In addition, the FCAN issued a press release stating that due to factors like the slowdown in construction, economic recession, low capital budget allocation, and inability to utilize the allocated funds, cement industries in Nepal have been facing rising costs. With demand decreasing and industries operating at just 30 percent capacity, nearly all large cement industries are suffering significant losses.
“The industries are unable to operate due to the huge losses amid the increase in production costs and transportation fares. We are operating industries by arranging alternative energy from generators while challenges persist in payment of the interest and installment on loans taken from banks, purchase and import of raw materials, and the fact that the industries have been facing power cuts for up to 12 hours daily from the Nepal Electricity Authority for the past few months,” the press release stated.
“While industries have the legal right to set prices based on their costs, we trust that the current situation will be carefully considered. We hope the arrangements for selling and distributing cement at the prices outlined in the association's correspondence will be implemented from January 25, 2025, with adjustments to the current selling price, and necessary support provided by member industries,” the association stated.
