Let’s resolve cement pricing conundrum
The recent tension between cement manufacturers and the Ministry of Trade and Industry over cement pricing has sparked intense debate and raised concerns about its impact on the construction industry and the economy in general.
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At the root of the matter is the proposed Legislative Instrument aimed at regulating cement prices that has been met with resistance from manufacturers who cite unfairness and lack of transparency for their action.
As the impasse continues, the fate of the construction industry hangs in the balance. The industry relies heavily on cement, and any disruptions in supply or price fluctuations could have far-reaching consequences.
The Daily Graphic is of the view that the situation highlights the need for a comprehensive approach to addressing the complex issues driving cement price escalation.
The cement industry is a complex sector, with various players involved in the production and distribution of the commodity. The industry relies heavily on imports, with key raw materials such as clinker, gypsum and limestone imported from countries such as China, Turkey and Egypt. The industry also depends on significant amounts of energy, primarily petroleum coke and diesel, to power its operations.
Already, the manufacturers have cited the unstable exchange rates and the depreciation of the Cedi as major factors contributing to the increase in cement prices. The depreciation of the cedi has led to a significant increase in the cost of imports, making it challenging for manufacturers to maintain profitability. Additionally, the industry has faced challenges in terms of energy costs, with the volatility in global oil prices affecting the cost of production.
However, while these challenges are genuine, some manufacturers have been accused of producing substandard cement, which has further complicated the situation. The Ghana Standards Authority (GSA) has identified instances of cement products that do not meet the required standards, posing a risk to the quality of construction projects.
Last year, the GSA led operations to close down some of the facilities where substandard products were being manufactured. Some of the manufacturers were also arrested.
In this context, the proposed Legislative Instrument aimed at regulating cement prices must be carefully considered. While the intention to protect consumers is commendable, imposing price controls without addressing the underlying factors could lead to unintended consequences such as shortages and black markets.
Instead, we urge the Ministry of Trade and Industry and the Chamber of Cement Manufacturers to engage in constructive dialogue, considering the interests of all stakeholders. A balanced approach, taking into account production costs, market dynamics and consumer needs, is essential.
To ensure transparency in pricing, we recommend that cement manufacturers publish their ex-factory prices, breaking down the costs of production, including raw materials, energy and labour. This will enable retailers and consumers to understand the pricing structure and make informed decisions.
The Daily Graphic believes that transparency in pricing is essential especially regarding commodities that are of such importance to the economy, such as cement.
We also suggest that the industry adopts a robust quality control framework, ensuring that all cement products meet the required standards. This will not only protect consumers but also enhance the reputation of the industry as a whole.
Indeed, we have monitored the stakeholders engagements, led by the Director-General of GSA, Professor Alex Dodoo, who is also the Chairman of the Cement Manufacturing Development Committee, to bring industry and government to a common consensus: good quality cement which is used appropriately and transparency in pricing.
The Daily Graphic supports all efforts at de-escalating the cement pricing conundrum. We, however, maintain that it requires a comprehensive approach that addresses the technical details of the industry, the challenges faced by manufacturers, and the need for transparency and quality control.
By working together, we can ensure a thriving construction industry that supports Ghana's development goals.