Industry leaders deny cartelling and point to the increase in cement prices as a cost adjustment

Cement industry owners assert that prices have been changed based on manufacturing costs rather than being raised excessively. The Nepal Cement Manufacturers’ Association (NCMA) confirmed that there was no cartelling in cement pricing during a press conference held in the capital on Friday.

The NCMA Chairman, Raghu Nandan Maru, stated that the accusation of cartelling was unfounded and that the industries autonomously set the prices of their goods. “We have not set the price of cement in the same manner that the Nepal Bankers Association sets the interest rate on loans and the Federation of Nepal Gold and Silver Dealers Association sets the price of gold and silver. “We don’t engage in carteling,” he declared.

Maru also related the hike in cement prices to higher production costs brought on by power outages, while he ascribed the production fall to a decline in demand. “There is no evidence to support the claim that price increases were arbitrary. Because of load shedding, production has dropped. We haven’t intentionally halted production. The cost of operating generators has skyrocketed. Due to a shortage of development funding, demand has decreased. Nobody has been instructed to cut back on production. He contended that no one had been instructed to raise the price before selling.

On Wednesday, the House of Representatives’ Public Accounts Committee (PAC) ordered the Ministry of Industry, Commerce, and Supplies to quickly regulate prices. In a protest to the committee, the Federation of Contractors’ Association of Nepal said that a cartel of manufacturers had raised cement prices from Rs 400 per bag in Shrawan (mid-July to mid-August) to over Rs 800 currently.

The industrialists recognized a small increase in selling prices as a result of growing costs that they were no longer able to absorb, but they denied imposing the exorbitant prices that the FCAN stated. “22 of the 65 cement companies have shut down entirely as a result of significant losses and their inability to turn a profit,” Maru stated.

“We also want to let you know that the economic crisis is causing other industries to close. Cement industries are unable to continue operating at a loss for a lengthy period of time as a result of this challenging circumstance. In order to cover the minimum production cost and pay the interest and loan installments, we have raised the selling price of our items in recent months.

In comparison to the price in mid-July, the NCMA has agreed that the cement sale price should not rise by more than Rs 115 per bag. According to Chairman Maru, all manufacturers decided to cap the price increase at a maximum of Rs 115 following talks with the Industry Minister and taking consumer interests into account.

“A letter has been sent to all member industries to ensure that the sale price does not exceed Rs 115 per bag (excluding VAT) in comparison to the price in mid-July, taking into account geographical and commercial conditions,” he stated.

Additionally, the FCAN released a press statement claiming that the cement industries in Nepal have been dealing with growing costs as a result of reasons such as the economic slump, slowdown in development, insufficient capital budget allocation, and inability to utilize the given funds. Almost all major cement companies are losing a lot of money as a result of declining demand and businesses running at only 30% of their potential.

Due to the massive losses and rising production and transportation expenses, the industries are unable to function. While there are still issues with paying interest and installments on bank loans, buying and importing raw materials, and the fact that the industries have been without power from the Nepal Electricity Authority for up to 12 hours every day for the past few months, we are running our businesses using alternative energy from generators,” the press release said.

“We expect that the current situation will be carefully considered, even if industries are legally allowed to establish prices based on their costs. With changes to the existing selling price and the required assistance from member industries, we hope that the agreements for selling and distributing cement at the pricing specified in the association’s correspondence will be put into effect on January 25, 2025,” the association said.