Increased demand from a booming construction industry in post war Sri Lanka has resulted in a severe cement shortage in the country.
Projects are in danger of slowing down as private sector and the Sri Lankan government is struggling to fill cement shortages in the country’s US$2.2 billion industry.
In August, the government ordered imports to offset the shortage but the cement is yet to be released into the market after the Sri Lanka Standards Institution (SLSI) pronounced them to be of inferior quality. This sparked off a tense standoff between the Cooperatives and Internal Trade Ministry that imported the cement and the SLSI, which insisted testing should be done before the stocks are released to the market.
An irate Cooperatives and Internal Trade Minister Johnston Fernando was seen publicly criticizing the SLSI for not releasing the cement and has called on the Science and Technology Minister, under whose authority the SLSI operates, to take disciplinary action against the officials that have prevented the cement from being released onto the market.
The SLSI officials have maintained that they are simply doing their job and looking out for the consumer.
Lucky Cement, a Pakistan company, has brought 14,000 bags into the country but cannot release it into the market until samples are checked. However they have received certification from a laboratory in London and the SLSI has agreed to conduct spot checks on any future shipments. Nonetheless it would be at least a week more before the supplies are released.
Industry experts insist that the stocks imported by the government are inadequate. Ceylon Institute of Builders
President Rohan Karunaratne has called for more imports and discouraged measures to increase cement prices.
Importers point to high prices in the world market as a reason for the shortage and insist that prices should be increased by US$3 to remain competitive.
Pakistan and India are Sri Lanka’s main cement suppliers but of late they have found more lucrative offers elsewhere. Karunaratne has speculated that the increased building for the 2012 Olympics among other events could be the reason for the increased demand. Other experts have pointed out that demand peaks during the August and September months but usually dips towards November.
The Consumer Affairs Authority is powered to control prices of essential goods in Sri Lanka including cement. Several importers have already appealed to it to allow them to increase the optimum price of cement but the decision is still pending.
Meanwhile Tokyo Cement and Holcim Cement that are the only two companies in Sri Lanka to manufacture the product stress that they are producing at maximum level and cannot increase output to bridge the shortage.
An official from Tokyo Cement expressed hope that the upcoming north-east monsoon would reduce construction and by extension the shortage.“This is more a supply shortage than a demand driven shortage,” he explained adding that buffer stocks were low in the run up to the peak months causing the crisis.”
Demand for cement has grown sharply in tandem with a pickup in construction. In the first quarter the construction sector’s GDP had grown by 14.3% in comparison to 8.5% in the corresponding period of last year.