The Nepal Cement Manufacturers’ Association (NCMA) addressed concerns over recent price hikes and allegations of cartelling during a press conference held in the capital. The association clarified that the price adjustments were necessary due to rising production costs rather than collusion among industry players. NCMA Chairman Raghu Nandan Maru emphasized that the cement prices are independently determined by each company and rejected claims of collective price-fixing. He argued that the price adjustments were not arbitrary but were driven by increased costs associated with prolonged power outages and the high expense of running generators.
Maru also attributed the decline in production to reduced demand caused by economic and developmental slowdowns. He explained that many industries are struggling to operate, with 22 out of 65 cement plants shutting down entirely due to financial losses. Remaining industries are operating at only 30 percent capacity, burdened by high raw material and transportation costs, coupled with up to 12 hours of daily load shedding by the Nepal Electricity Authority. The financial strain has made it increasingly difficult for industries to service their loans or sustain operations.
The Public Accounts Committee (PAC) under the House of Representatives recently directed the Ministry of Industry, Commerce, and Supplies to control cement prices. This action followed complaints from the Federation of Contractors’ Association of Nepal (FCAN), which alleged that a cartel had caused cement prices to spike from Rs 400 per bag in mid-July to over Rs 800. Industrialists disputed these claims, stating that prices had not risen to the levels alleged but acknowledged a modest increase due to unavoidable cost pressures.
In response to these concerns, the NCMA has capped price increases at Rs 115 per bag, excluding VAT, compared to mid-July prices. Chairman Maru stated that the association, after discussions with the Minister of Industry, directed member companies to comply with the price cap to balance consumer interests and industry viability. This new pricing arrangement is set to take effect on January 25, 2025.
The NCMA also highlighted broader challenges affecting the sector, including a slowdown in construction activity, reduced government capital expenditure, and underutilization of allocated development funds. These factors have further exacerbated the financial difficulties of cement producers. The association has called for support from stakeholders to ensure the industry’s sustainability, emphasizing that price adjustments are necessary to cover minimum production costs and ensure continued operations amidst these challenges.
