Emergency cement shipments to SL

Tuesday, 2 August 2011 00:04 - - {{hitsCtrl.values.hits}}

By Uditha Jayasinghe

The crisis caused by the shortage of cement is expected to ease off towards the end of this week as four fresh shipments arrive in Colombo from Pakistan. However, industry officials insist that imports will need to increase to meet demand of one million tonnes of cement every month.

Sri Lanka’s Rs.250 billion building industry was choking under a cement shortage last week with some projects having to be halted. Ceylon Institute of Builders (CIOB) President Dr. Rohan Karunaratne told the Daily FT that even though four shipments were expected at the end of this week by the Sri Lanka Cement Corporation the supply needs to increase.

“These latest shipments are being brought in by the Lanka Cement Corporation but as a State institution it has only 20% of the market share. Therefore, this will not be adequate unless the private sector companies also increase their imports to meet the increased demand,” he said. According to Dr. Karunaratne the reason behind this is the fact that the two largest suppliers of cement to Sri Lanka are selling large amounts of their product to the UK. Nonetheless, Sri Lanka also has a hefty Rs.250 billion construction industry that absorbs more than one million tonnes of cement a month.

“India and Pakistan are our biggest suppliers of cement. But in the recent months they have been selling most of their stock to the UK. Britain is buying massive stocks of cement, perhaps to fund their construction for the Olympics.

This is resulting in not only a cement shortage but an increase in prices,” he explained.

At present a bag of cement is sold for around Rs.680-Rs.690 but the CIOB President acknowledges that if the amounts were to meet international prices then the amount will have to increase by at least Rs.50. This would be a huge blow to the industry since it would discourage more building. Even though several private sector companies import cement the prices are controlled by the government.

Dr. Karunaratne admitted that finding a solution for the shortage was difficult but insisted that the government authorities should engage with the private sector companies to find a halfway point so that imports could increase without a corresponding rise in prices. In the long term getting the KKS factory up and running will be crucial to unhindered local cement supply.