Ministry Lifts Off Price Cap on Cement

The price of cement is available on market prices after the Ministry of Trade & Industry removed cap it imposed since June 2020.

There is a need to focus on matching the supply and demand to stabilize the market instead of trying to regulate the price, according to Melaku Alebel, minister of Trade & Industry, who briefed members of the media today, August 25, in his office located at Arat Kilo. Hoping to curb the recurring supply shortage and price hike of the product, officials at the Ministry had granted permits to only six enterprises for wholesale distribution of cement. They had also caped prices allowing a 20 Br from a quintal as a price margin for retailers. Severe cement shortage of cement was followed in the market and most of the retail outlets were out of stock, causing an 80pc hike.

The crisis in the market has compelled officials at the Ministry to carry out an assessment. The Minister attributed under capacity in production as the source of the problem. Close to 12 cement factories in the country are producing at an average 63pc of their aggregate capacity, although having an annual output capacity of 15.1 million tonnes of cement. It falls very much short of the 11.5 million tonnes in an annual demand.

However, factory managers argue recurrent electricity blackout, lack of sufficient transportation as well as a chronic shortage of forex for the procurement of spare parts are to take the larger share of the blame. The government, nonetheless, has made 85 million dollars available for the procurement of spare parts, Melaku disclosed.

The Ministry hopes to see the capacity of the cement factories to increase to 85pc in the coming three months; meanwhile it will allow the importation of cement to match the current need, according to the Minister. The permit for imports will be issued to grade one contractors and megaprojects and enabled wholesalers or agents to engage with the distribution of cement again.

A cement transaction directive, which will become effective from the coming Monday, August 31, will also come into play outlining different responsibilities of the Ministry, wholesalers, retailers and factories. The directive imposes administrative and legal measures on those failed to comply with the provisions, the Minister said.

Source: Addisfortune

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