Dungsam Cement Corporation Limited

Unavailability of quality coal and lockdown impacts cement production and causes shortage in the country

The shortage of cement in the country is having an impact on the construction sector and on the private builders. The shortage may ultimately lead to cost escalation, low quality work at construction sites, and black business.

The Coal, lockdown  and transportation problem

It was learnt that the biggest issue in the future would be the availability and cost of coal. The cost escalation of low ash coal is of a serious concern, although there is no change in rate with SMCL coal. Cement plants cannot use SMCL coal alone without blending with low ash coal.

The cement plants will suffer from serious implications in a long run if the situation does not improve. The price of coal is almost increasing by 100 percent. Cement distributors across the country are not able to meet the demand with what they get from the cement depots.

The quantity of cement being produced at Lhaki Cement has gone down as compared to past years, and the plant is unable to fulfill the demand for cement in the country.

The Penden Cement Authority Limited (PCAL) had no production for quite sometime due to maintenance and restoration works in the factory. However, it is expected to resume the production of cement shortly.

An official from PCAL said that the shortage of quality coal and the lockdown has impeded works, which was scheduled to resume on 15 March.

“We were able to finish up the maintenance work long before the lockdown, however, there were few days of delay due to the labor shortage. After the lockdown, unavailability of quality coal and transportation of raw materials from Phuentsholing was a major challenge for us,” he added.

PCAL was also not able to process with the quality parameters, causing further suspension of operations until better quality coal can be purchased.

The company is in the process of sourcing coals from India, and also on a look out for other alternatives. The whole process is impacted by the pandemic and lockdowns, he said.

He further said, “We are planning to buy a quality clinker from outside so that we can mix with our clinker and produce cement. Until and unless we are complied with the stranded, we don’t supply our product in the market.”

Things are improving but there are still challenges, and unless PCAL cement hits in the market, we cannot comment on the price of the cement, he added.

An official from Lhaki Cement has shared that their production is on-going, and mostly on the containment basis, however, the production quantity has reduced in the last few months. Since the two cement manufacturers are not producing, there is pressure from the consumer with the huge demand, he said.

“We are not able to get the best quality coal, which is one major factor for less production and workers working in containment mode for quite long somehow contributed to the efficacy of production. Whatever we could produce are being sent to Samtse and some parts of India,” he said.

Lhaki Cement was able to supply cement to Phuentsholing 10 days ago, but the pace was affected due to maintenance work in the plant, he said, adding that the production should improve in few days’ time.

Once the PCAL and DCCL start their production, there should an adequate supply of cement to meet the demand.

“The price might shoot up as the cost of the coal has gone up by double and the price of the fuel will have bigger impact on the production. That way, price is expected to escalate,” he added.

Cement agents say big demand but no supply

One of the cement agents in Phuentsholing shared that there is a huge demand for cement from across the country, and the plants have not been able to manufacture the sufficient amount of cement due to various reasons.

He said, “The supply from the manufacturers gets delayed by 10 to 15 days causing lots of backlog. Moreover, the frequent lockdowns contributed to disruption in the chain of supply as processing anything was difficult during those times.”

Transporting the materials is another challenge, he said as most of the drivers ferrying goods tested positive, and it was hard for them to get the e-Pass for movement.

Though there are demands of 30 to 40 truckloads of cement at the moment, they are not able to fulfill their demands due to less cement production from the plants.

Given the shortage of cement in the country, he said, “My agent does not facilitate the importation of cement from India. We would accept if the manufacturers, themselves, facilitate that, but for now, I will supply whatever I get from local plants.” 

The manufacturers have not given the new rate for the cement, and it is likely that the price might increase due to the increase in fuel price and coal price.

The price for cement in Phuentsholing was Nu 341 per bag, while the price in Thimphu was Nu 410 per bag. However, if the cement was transported from Nganglam via Trongsa then the charge shoots to Nu 460 per bag.

Another cement distributor, Namgay, said that though the demand is very high they can supply what they get from the manufacturers, and comparing to the past years, the supply is very less.

“Even if we have cement in the plants, transportation is an issue. Consumers prefer to buy from Phuentsholing as the cost is quite high when they buy from Thimphu due to transportation charges,” he added.

Contractors hit

Meanwhile, Dawa, a contractor, said that there is an acute shortage of cement. They had a few bags in stock, but unfortunately the laborers on site sold the bags from the stock, knowing the high demand of cement across the country.

“There is no work progress, as there is a drastic decrease in cement supply at site, and we cannot travel to the site to monitor due to the lockdown. Black business is happening but it is hard to point out without concrete evidence. No person lets go of any opportunity to make easy money,” she said.

Importing the cement from India is a complicated process due to the pandemic, and the price could be double now that the price of fuel has increased, she said, nevertheless, she is looking for other alternatives to bring in the cement.

Another contractor, Tobgay, said he has no choice but to import cement from India after the acute shortage of cement in the country.

He said, “Cement from within is cheaper, but we cannot stop our works, and without the cement we will have no progress in work which may lead to penalty in the end. So, my firm decided to import from India.”

He further said that people are greedy and do not leave single chance to make easy money. Contractors are suffering while there are people who are into black business taking advantage of the situation. If the government could intervene and protect the people from unnecessary losses, he added.

Similarly, Dorji said, “Everyone is indeed facing the same situation at the moment. Can’t believe that the pandemic is robbing us and I think there will be no end to this. The moment one issue gets settled, the other comes out on its own.”

Cement has become so precious for the construction sector now that the owners are willing to pay extra money to get the cement, he said, adding that it is disappointing to see people knowingly charging them extra.

“I know some people who are into the black business, yet I am helpless because I see no way out. There are site supervisors who are selling the cement charging extra and there are middlemen who are into doing business during such crisis,” he added.

Likewise, many contractors shared the same disappointment in people who are making black money instead of helping each other during such dire times.

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