Cement manufacturers want duty reinstated

July 22, 2008

, NAIROBI, July 22 – Cement manufacturers are calling on the government to reinstate the suspended duty on the product.
Reacting to a proposal by former Finance Minister Amos Kimunya to lower the import duty from 40 percent to 25 percent in the 2008/2009 budget speech, Bamburi Cement Marketing Director Robert Nyang\’aya said this would negate the efforts to make the industry competitive before the end of 2011.
The duty regime was instituted in 2003 at the East African Community (EAC) level with the understanding that it would come down on a reducing balance basis to zero by 2011.
"We have found ourselves between a rock and a hard place," he said, explaining that the lifting of the suspended duty component was meant to allow cheap imports and thus reduce the high prices of cement in the local market, but on the other hand the factors of production such as energy, keep spiralling.
He warned that if the regime remained, the industry, which has been investing heavily in developing new capacity, might be thrown off balance.
It was estimated that with the ongoing investments, the cement capacity would double by 2010.
"We were doing this with the view that the environment was very predictable," he said.
Noting that the government\’s objective as spelt out in Vision 2030 was to become an industrialised economy, Nyang\’aya said there was need to have a conducive environment that can attract and encourage big investors into the country.
"The good thing is that we are in dialogue with the government to agree on what is the best way forward," he added.
At a press briefing, Nyang\’aya said the industry does not envisage a situation where the manufacturers would import cement as they don\’t foresee the demand for the commodity outstripping supply.
Meanwhile, the director said they were engaging the Energy Regulatory Commission (ERC) to see whether it could review the recently adjusted electricity costs, which would impact negatively on their business.
Electricity prices went up by approximately 24 percent from July 1 following the implementation of a new tariff structure announced by the ERC.
Fuel and electricity contribute almost 50 percent of the cost of production for the industry.
"We are the largest users of power in the country and we have therefore been lobbying the regulator to help us manage this area as it is one that makes us uncompetitive," he stressed.
Nyang\’aya also said that despite the spiralling energy costs, the sector had not passed on the costs to the consumers.
He was however non-committal on whether the industry would increase the price of the commodity as it was inevitable that it would factor in the impact of the high inflation and fuel prices.
"It is going to be difficult to keep a lid on (prices) increases," he admitted.
At the same function, it emerged that the Kenyan economy loses more than Sh3.4 billion every year due to road accidents.
Bamburi Cement Group Safety Manager Magdaline Mwende said statistics shows that the country records among highest road fatalities in the world, largely due to the lack of enforcement of road safety laws, a poor road network and bad social attitudes.
Mwende called on the government to take several measures such as the implementation of the National Road Safety Policy, the enforcement of legislative standards as well as invest in training qualified drivers so as to influence safety trends.
She however called on the private sector especially those involved in the transportation of bulky cargo to ensure safety compliance by for example including their transporters in road safety programs and setting aside funds to run such programs.

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