Factories to file complaint on latest factory gate prices
Individuals and families are no longer allowed to acquire over 15 quintals of cement at once for any of their construction works. The decision came from the Ministry of Trade and Regional Integration yesterday in the form of a public announcement as part of its plan to control illicit cement trade.
The public announcement asserted that the factories must sell the cement to authorized agents only. Agents who are only approved by the regional and city administrations have the right to hold the product, a move targeted at paralyzing unauthorized trucks or warehouses from hoarding.
The announcement came into effect beginning September 16, 2022.
The main motive behind the decision for public announcement was to avail legal ground for any administrative and legal actions, according to Kumneger Ewnetu. communications director at the Ministry.
“The law enforcement bodies required a legal support to take action on those limiting the required quota and trading outside authorization by their respective administrations,” Kumneger told The Reporter.
Kumneger further explained that private and state development are exempted from the 15 quintal quota as they process their permits from their respective authorities and their quota will be allocated based on the scale of the projects they have.
“This applies only to those with small house repairing or building projects. They usually don’t need over the stated amount at once,” she said.
This was not the only decision the Ministry announced last week.
Different factory gate prices for the product were also set, ending the period on which the factories were setting the prices in discussion with officials at the Ministry.
Beginning from the least gate price of 510 birr, up to the maximum 683 birr a quintal, 10 cement factories are ordered to sell the cement to agents with different prices. The least gate price was set for Pioneer Cement while the maximum was set for Habesha Cement.
Ethio Cement and East Cement have been given an order to sell at 595 birr gate price. The biggest in the industry, Dangote Cement will be required to sell for 549 birr a quintal, National Cement on 561 birr, and Derba Cement on 590 birr a quintal. The price ceiling will be applicable only for three months.
The decision by the Ministry last Wednesday to set prices was intended to stabilize the market. A quintal of cement was being sold between a 1,000 birr and 1,500 birr at most places in the last few days.
Gebremeskel Challa, Minister for Trade and Regional Integration, informed a group of media last week that his office had been conducting studies with group of experts about the decision, and also discussed with factories on the result of the studies.
Echoing what the minister said, Kumneger added that the prices were announced following the discussion and approval of the factories.
Nevertheless, a top executive at one of the cement factories told The Reporter that the latest decision by the Ministry will gradually cripple the factories as the latest price ceiling would push them to bankruptcy. He fears his factory alone could lose up to 100 million birr in the coming three months due to the decision.
“We were selling the products for about 650 birr a quintal and even then were fighting to bear the increasing production costs, now we have to sell a 100 birr or so less than that,” he said.
The price of cement at the end market, according to this executive who requested anonymity, was over two times higher than what they have been selling. The factory was never responsible for what happened in the long market chains, as he explained.
“The Trade officials have seen four months of our production cost and took an average of that to conduct their study on our production cost. But there is no way that the costs would stay the same for four months, it would increase drastically” he said.
The factories are now planning to file a complaint in unison to the Office of the Prime Minister for a solution.