[ad_1]
The price of a bag of cement is likely to continue its ascent and reach 60 GH ¢ by the end of the year if urgent measures are not taken to revise, suspend or remove certain taxes and levies that affect the accumulation of production costs, cement manufacturers said.
Manufacturers say they are in dire straits and have been forced to sacrifice yields and redouble their efforts to stay in business – a situation that is gradually reaching a tipping point.
According to industry data, in the past seven months, the retail price of cement has increased three times, resulting in an increase from 10 GH to 12 GH, an increase of about 27% and pushing the retail price around GH50; a situation which has been described as unprecedented.
Manufacturers say they had to absorb much of the cost to keep prices at the current rate; but if the government does not deploy measures to help alleviate the cost accumulation, it will have no choice but to let the price take its natural course – a development that would be disastrous not only for them but also for the economy. ‘economy.
“Cement is a strategic economic asset that has national security implications and therefore should not be allowed to behave as it behaves. The government must intervene, and we have presented documents to some ministries to do something urgent, ”said the executive secretary of the Ghana Cement Manufacturers’ Chamber (COCMAG), Dr George Dawson-Ahmoah , at B&FT in an interview.
However, he recognizes that both external and internal factors have led to the current development – but noted that since external factors are difficult to change, some of the internal factors can be controlled.
External factors
Much like many other sectors of the economy, the advent of COVID-19 has shed its dim light on the cement industry around the world.
Cement is a mixture of clinker, gypsum and filler (limestone). Clinker makes up 80 percent of the cement, while gypsum makes up 5 percent and limestone (or other constituents) 15 percent. Clinker and gypsum are imported. The availability of the main raw material for the manufacture of cement, clinker, has become of serious concern. The rise in commodity prices over the past 12 months has been a big challenge for the cement industry.
In addition, the scarcity of ships or empty containers to transport goods globally has dramatically influenced the cost of freight, which in turn has increased the cost that manufacturers pay to import clinker to fuel their industries. factories locally. Indeed, the price of clinker (Clinker + Freight) increased by 55% during the first half of 2021 and could even soon reach 98%, according to data from the Chamber of Cementiers.
Internal factors
Delays at port are said to be among the main challenges facing cement manufacturers. Any importer has contractual conditions to respect, under penalty of paying penalties. For cement manufacturers, each day the ship is late at anchor or in port generates a penalty of US $ 35,000 to US $ 45,000… which was US $ 15,000 per day of demurrage before 2020.
Today, ships wait an average of 10 days to unload the clinker compared to 1 or 2 days in previous years. And the fact is that this penalty must be paid in foreign currency to foreign shipowners.
This development worsened in April 2021 due to the congestion of bulk terminals / posts and the exclusion by the Ghana Ports and Harbors Authority (GPHA) of cement factories from the use of posts 1 and 2. Numerous petitions and discussions were initiated by the Cement Chamber. Manufacturers, but they are still under consideration by the GPHA.
Another concern of the House is the payment of the fumigation tax for imported clinker. The House says it does not know why a fumigation tax should be imposed on clinker, the raw material that will be brought into a factory and processed into cement to high international standards. So they want the tax removed to help reduce the cost build-up on the product.
They also ask the government to reconsider the payment of import duties on the import of a raw material that will be transformed into a finished product for the market, and on which VAT will be paid. They want the fees to be removed for a period or changed to give the industry a bit of a break.
They believe that a positive result of the above will help stabilize or reduce the price of cement.
Interaction with government
Together with the Ministries of Trade and Industry and the Ministry of Transport, the Chamber of Cements (COCMAG) tried to find solutions to contain these impacts, and very productive meetings were organized with many ideas proposed. The Ghana Shippers’ Authority and the GPHA are also continuously engaged.
COCMAG Executive Secretary Dr George Dawson-Ahmoah said, “However, there are many challenges for leaders in translating proposals into effective action. In this regard, the Chamber still calls for urgent action by the GPHA to avoid a further increase in cement prices ”.
Source: B&FT
Source link
