Institute of Builders decries cement shortage; urges swift support from CBSL

Saturday, 22 January 2022 01:29 - - {{hitsCtrl.values.hits}}

Chairman Dr. Rohan Karunaratne

The Ceylon Institute of Builders (CIB) yesterday raised concerns over the worsening cement shortage and urged for swift solutions from the Central Bank.

CIB said the construction industry, being one of the largest GDP contributors and employment generators, is paralysed due to the massive shortage of cement in the country.

“We require local production of approximately 8.8 million tons, and presently, we can’t release this because LCs cannot be opened to import raw materials. Further, there is no stable selling price for cement. Although a fixed rate has been indicated in the range of 1,300, this is not our reality,” CIB Chairman Dr. Rohan Karunaratne said.

He said cement prices are dangerously volatile and the issue of such abnormal prices is overshadowed by the larger issue that cement (at any price) is markedly unavailable.

“Therefore, the Central Bank should offer an appropriate solution for banks to open up LCs for raw material importers of cement,” Dr. Karunaratne added.

According to CIB over the last two years, the cement market has struggled. First, there was a 11% year-on-year drop in total local production and imports, to 7.2 million tons in 2020 from 8.1 million tons in 2019. Then, imports fell by 18% year-on-year to 1.83 million tons from January to August 2021 from 2.24 million tons.

“Local production has stepped up to mitigate this, producing a final growth in total local production in 2021, and continuing this effort in 2022. But they cannot retain this untiring support to Sri Lankan building without their raw materials,” CIB Chief said.

“The cement industry is a good example of how dangerous exchange rate effects are, once again, making the survival of thousands of Sri Lankan workers and many of our copious businesses, an almost impossible job,” he added.

It was pointed out that the largest supplier Tokyo Cement (accounting for approximately 38% of production), INSEE (35%), Ultratech (13.6%), Singha etc., when questioned about the cement shortage, have warned the industry that no relief should be expected anytime soon and that this may continue, unless they are given the ability to open up LCs.