Blackouts drive Up cement prices
The price of cement—a critical ingredient in the construction sector—has gone up, a development manufacturing firms have attributed to rising cost of production and power outages.
The cement price jump comes at a time one of the country’s cement manufacturers, Mangochi-based Cement Products Limited (CPL), has for the past two weeks stopped production due to unavailability of clinker, which the company imports from Dubai, United Arab Emirates.
Spot checks show that on average, a 50 kilogramme (kg) bag of cement from LafargeHolcim has increased by about four percent from K6 750 to K7 000, while the same bag from Shayona Cement is now selling at K6 300 from K5 900, a seven percent jump.
However, CPL has since maintained its price at K6 300 per 50kg bag.
Electricity Generation Company’s (Egenco) power supply has reduced by a third largely due to low water levels in Lake Malawi, which feeds into Shire River, the main source of 90 percent hydropower generation.
In an interview, LafargeHolcim Malawi commercial manager Hilary Mkulichi said the company has increased the price of its cement due to operational costs as a result of power outages as well as the increase in prices of raw materials.
“We have increased our prices by less than five percent because we were incurring extra costs running diesel generators during blackouts. In addition to this, we have also seen a rise in the prices of raw materials,” he said.
Kasungu-based Shayona Cement public relations officer Rowland Mwalweni said they have problems with power supply and other factors involved in the production of cement.
“As a result of the erratic supply of power, we cannot cope with demand. Because of the blackout, we sometimes have to throw away the raw materials,” he said.
While admitting that they have not been able to supply cement on the market for the past two weeks, CPL chairperson Aslam Gaffar said on Monday that the company is working on speeding the commissioning of its clinker plant in Mangochi to ramp up production.
He explained that for the past two years, they have been producing at 40 percent capacity, which means the company could not import a lot of clinker because of the reduced capacity.
Said Gaffar: “All two suppliers of clinker through the port of Beira have increased their prices by 21 percent, and when you look at that price increment versus what is offered on the market, we saw that we could be losing because even at 40 percent operating capacity, we are selling our products at breakeven with only a profit margin of five percent.
“So, we opted not to import clinker nearer home, but only one supplier who has offered us limited quantity and is selling us 800 tonnes per week and we are able to work on that,” said Gaffar, adding that increasing prices would be illogical for the market.
But the hike has not pleased consumers. A Blantyre-based contractor, Chrispine Munthali, could not hide his frustration.
“This is coming at a time we are encouraging infrastructure development. With the structures I am building, the price increase means that I have lost a bag of cement I could have used to build one brick pillar and this is a setback,” he said. n
