Make cement pricing transparent - Stakeholders manufacturers
Stakeholders at a forum on the proposed legislation for cement price reporting have called for transparency in cement pricing, urging manufacturers to disclose their price build-up to address consumer concerns over the rising cost of cement and the frequent price adjustments.
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The proposed regulation, currently before Parliament, seeks to address these concerns by compelling manufacturers to declare their price build-up and ex-factory prices.
The forum, organised by the Ghana Chamber of Construction Industry and attended by members of the Chamber of Cement Manufacturers Association Ghana (COCMAG), aimed to address issues surrounding the proposed legislation and its impact on the construction sector.
Industry burdened
The cement manufacturers argue that while they support transparency, they are against price controls and believe the legislation should be suspended for further consultations.
They attributed the price increases to exchange rate volatility, levies and taxes, as well as the depreciation of the cedi. The Chief Executive Officer of the CBI Ghana Limited and Chairman of the COCMAG, Frederic Albrecht, said the legislation must be suspended to make room for more consultations and engagements between the government and industry on the way forward in dealing with cement price increases.
Explaining the reasons for price increases in the cement industry, Mr Albrecht said exchange rate volatilities and the continuous depreciation of the cedi were the major drivers aside from levies and taxes.
He explained that 77 per cent of the cost structure was directly linked to hard currency, hence the recent depreciation significantly contributing to the price build-up. He said key materials such as Clinker and Gypsum were imported from the US.
The dollar and the purchase price, shipping, port charges and applicable taxes all contribute to increased expenditure. “Consumables packaging, spare parts, lubricants, grinding aid chemicals are either imported or are dollar or euro based,” he said.
He said while 23 per cent of materials such as limestone, granite and energy were locally sourced, the costs were mostly driven by inflationary cost drivers.
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Policy
The CEO of the Ghana Chamber of Construction Industry, Emmanuel Cherry, told the Daily Graphic in an interview that while players in the construction sector supported the publication of the price build-up as a means of transparency, such a move must be made with the right policy document and not the current Legislative Instrument before Parliament.
“While looking to regulate the sector, government must also look at the underlying factors of the price build-up, including exchange rate, interest rate, utilities, freight, demurrage, taxes, among others,” Mr Cherry said.
Asked if the chamber was against the disclosure of price-build up by the manufacturers, Mr Cherry answered: “Not at all”, and added, “But this current regulation cannot do that sincerely,” he said.
Petition
The Chief Executive Officer (CEO) of COCMAG, Dr George Dawson-Amoah, said in the light of concerns raised by manufacturers on the proposed legislation, the Chamber had petitioned Parliament to decline the proposed Legislative Instrument.
He insisted that the Minister of Trade and Industry needed to engage with the Chamber of Cement Manufacturers and other relevant stakeholders to discuss and address the underlying causes of the price escalation rather than laying the LI in Parliament.
He said a collaborative approach would enable all stakeholders to develop effective and sustainable solutions that considered the interests of all parties involved.
“We still need to engage as stakeholders to address the issues because it’s not as simple as they make it look that some manufacturers have come together to shortchange consumers but rather it’s a combination of factors that we must examine collectively through dialogue,” Dr Dawson-Ahmoah said.
Committee
Meanwhile, the Director-General of the Ghana Standards Authority (GSA) and Chairman of the Cement Manufacturing Development Committee (CMDC), Professor Alex Dodoo, told the Daily Graphic in an interview that the government was not seeking to introduce price controls on the cement industry but was rather making efforts to bring transparency into the operations of cement industry players.
“Transparency in cement pricing is a crucial factor in safeguarding consumer interests, ensuring fair market practices and fostering sustainable growth in the industry,” he said.
He said the proposed legislation would be a catalyst for a healthier, more competitive and sustainable construction industry.
“It builds trust, fairness and innovation and reduces unjustified price volatility,” he said. Prof. Dodoo explained that sanctions against cement manufacturers for price manipulations had occurred in various countries worldwide such as the Cement Cartel Investigation (2010-2012) when the European Commission investigated several major cement manufacturers, including Lafarge, Holcim, HeidelbergCement, Cemex, and Italcementi, for alleged cartel activities involving market sharing and price fixing.
He said there had been similar cases in South Africa, the United States, Brazil and India, among other countries across the globe.
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Legislation
The government, Prof. Dodoo said, was not setting control prices for cement but was rather protecting consumers against arbitrary charges for cement.
He said the Minister of Trade and Industry, K.T. Hammond, had repeatedly asked cement manufacturers to independently publish the ex-factory prices of cement monthly with the hope that regular publication of prices would keep consumers updated on trends in prices and prevent arbitrary price hikes by retailers.
He said although the industry agreed to publish prices to promote transparency, it failed repeatedly to publish the ex-factory prices of cement, prompting the minister to present legislation that required the regulator of cement, the CMDC, to ensure manufacturers published their ex-factory prices monthly.