By Yakuta Dawood
Amidst the uncertainty in the supply of cement and soaring prices, the cost of construction that will arise in the next few months is inevitable.
Sharing concerns with The Sunday Morning Business, the Chamber of Construction Industry (CCI) Chairman Eng. (Maj.) Ranjith Gunatilleke stated that a person who had saved Rs. 50 million to build a house with three bedrooms will now only be able to construct two or one bedroom due to the present cement crisis in the industry.
“Cement which was sold at Rs. 900 earlier is now available at Rs. 1,200; this is a 30% increase in price which has a serious impact on the construction sector. Prior to the current situation, a person would pay for the land value, get a loan from the bank, and start constructing, but now, the same person will need a minimum of Rs. 2.5 million to start the initial work,” Gunatilleke explained.
Commenting further, he stated that cement for the construction sector is as essential as rice for Sri Lankan people, which is why the shortage and the price hike is impacting essential work such as cutting concrete, tiling, rendering, and almost everything else.
“This is a serious impact which is causing a lot of issues. This is also impacting employers who specialise in specific areas in the construction sector,” he added.
Further, speaking to us, National Construction Association of Sri Lanka (NCASL) Chairman Susantha Ranjith Liyanarachchi said that construction work in the country is being severely affected to the extent where several individuals residing out of Colombo are facing difficulties in laying the foundation stone of their house.
“People who had saved money to construct their houses are struggling now. This problem has been incurred due to several reasons, but the most prominent issue is that middlemen involved in trading charge higher prices, to above Rs. 1,500, whereas there’s also a shortage of 300,000 metric tonnes of cement in Sri Lanka. Therefore, such issues have led to severe problems in the construction industry,” Liyanarachchi said.
Stressing further, he stated that due to the crisis faced, construction is getting delayed beyond the expected time frame whilst also impacting employment, since now, most of the engineers, architects, quantity surveyors, and general employees are at home with very little or no work to do.
“We can’t let the cement prices be increased without any valid reason. If they do that, what will happen to the businesses already operating? We have around 1.6 million people employed in this sector, what will happen to them? We are contributing about 18% of the gross domestic product (GDP). We raised this concern with the Finance Ministry recently, but unfortunately, nothing has been done yet, despite the promises made,” Liyanarachchi emphasised.
However, giving the concluding remark, he stated that to resolve the prevailing crisis, the Government could purchase cement from respective companies and then later allocate it to essential projects: “The Government can give 50% to essential projects and keep the other 50% in the market.”
Likewise, we also spoke to Chartered Engineer (Building Services) Samantha Indika, a representative of the construction industry in Sri Lanka, who told us that the current problems faced by the industry are a result of the import ban imposed in April 2020.
“The construction progress is not operating consistently due to the shortage of cement and the price hike in the industry. However, to prevent the house prices from increasing in the future, it is important that raw materials are continuously delivered without any delay, and the price of the raw materials are maintained,” Indika said.
Meanwhile, attempts to reach Construction Industry Development Authority Chairman Sohan Wijesekera and State Minister of Rural Housing and Construction and Building Material Industries Indika Anuruddha Herath proved futile.
Presently, consumers on several social media platforms have complained that although news reports state the price of a cement bag has been increased to only Rs. 1,275, none of the sellers in the industry are actually selling it at that price.
However, this situation caught public interest following the lifting of the maximum retail price (MRP) on cement. Accordingly, the price of a cement bag has been increased to Rs. 1,375 in actuality, contradicting the price being reported, i.e. Rs. 1,275.
This MRP on cement was removed last month (October) with other products such as milk powder, liquefied petroleum gas (LPG), and wheat flour, with the assurance that action will be taken against unreasonable price increases.
Commenting with regards to this, an official from the Consumer Affairs Authority (CAA) warned The Sunday Morning Business that there is a possibility of scarcity increasing as the control of MRP does not exist anymore.
He also said that the market situation is currently distorted along with the impact that exists globally due to the unavailability of coal in the region of India, Sri Lanka, and Pakistan due to its price increase. He assumed that consequently, this factor may have affected the cement availability in Sri Lanka.
Nevertheless, according to the Ministry of Trade, the reason behind the prevailing cement shortage in the country is the disruptions in the global supply chain as the country is heavily reliant on imports for local cement needs.
“We are totally dependent on China and Pakistan cement exports. At the moment the cement prices are high in the market as well as the shipping fee. Therefore, the cement prices keep increasing due to these reasons, and Sri Lanka is also affected by this matter,” Trade Ministry Secretary Bhadranie Jayawardhana told us last month.
Adding further, she mentioned that companies who import cement spend dollars to purchase cement and the import prices have gone up due to global supply chain changes.
“Lots of ongoing constructions are there including government projects in Sri Lanka, where cement plays a major part. Since there is no control over the prices there are some issues raised in the country with regard to the prices.”
Rising construction costs led by cement shortage
14 Nov 2021
Rising construction costs led by cement shortage
14 Nov 2021