It's A Free Market - GHACEM Tells World Bank
7/4/2012 8:01:00 PM -
The Ghana Cement Company Limited (GHACEM) has hit back at the World Bank for suggesting that Ghana’s biggest cement manufacturer connived with another cement producer to push up the price of the building product.
A World Bank lead economist, Mr Sebastian Dassus had in an interaction with journalists in Accra called for end to the duopoly that Ghacem and Diamond Cement enjoy in the production of cement.
The call was in response to the shortage and subsequent hikes in the prices Portland cement, which had angered the Association of Building and Civil Engineering Contractors of Ghana and the Ghana Real Estates Developers Association.
But Ghacem has in a swift response said the company is not enjoying any monopoly or duopoly with any cement company.
Strategy and Corporate Affairs Director, Dr George Dawson-Ahmoah, said “it’s a free market and no company had been prevented from producing cement”.
According to him, Ghacem’s monopoly was broken 12 years ago by Wacem, producers of Diamond Cement.
“Since then, other players have entered the cement market – Greenview International Limited, which operates in Tema Community 2; Savanna Cement at Buipe in the Northern Region and Fortress International, which imports bagged cement,” he said.
Dr Dawson-Ahmoah emphasised that Ghana had a trade liberalisation policy which allowed business entities interested to import any product or establish manufacturing units to do so, provided the rules and regulations are obeyed.
He further indicated that Ghacem, the leading manufacturer and supplier of cement in Ghana, would not and cannot prevent cement competition in Ghana, but would rather not hesitate to fight any competition which is on unfair grounds, stressing that competition must be fair and on equal terms.
He recalled an instance of unfair competition which warranted a joint petition by Ghacem and Diamond Cement in 2010 against a concessionary rate of five per cent import duty which Greenview International Limited, a Nigeria-based cement importer of finished bulk cement, was benefitting from.
The basis for the concessionary rate, he stated, was that the imported finished bulk cement was classified as raw material for the manufacturing/of cement which was incorrect and contrary to the provisions in the Customs Harmonised Code which they in the industry found not only as an unfair practice to the cement industry but also detrimental to the revenue due the state.
“This petition was investigated by the government that saw the merit in it and ruled on a concessionary rate of 10 per cent for Greenview International Limited instead of the five per cent concessionary rate,” he added.
GHACEM in May announced an upward adjustment in the prices of its cement products, prompting calls for the establishment of more cement companies.
The increase it said was as a result of the continuous depreciation of the cedi against the major international currencies, as well as high demurrage charges at the country's ports.
Per the increase, the 50 kilogramme bag of cement, which used to sell at an ex-factory price of GH¢13.34 at both the Tema and Takoradi plants of the company, now sells at GH¢15.29.
The GHACEM Super Rapid Bulk, which was sold at an ex-factory price of GH¢252 per tonne, is now going for GH¢289.800, while the 50 kilogramme GHACEM Extra which used to sell at GH¢14.200 is now GH¢16.330.
The GHACEM Extra Bulk, which used to be sold at GH¢270, is now being sold at GH¢310.
In May, acute shortage of cement on the local market caused distributors and retailers to take advantage of the situation to sell the commodity at exorbitant prices to reap abnormal profits.
The shortage, which had been caused by the shutting down of Diamond Cement Ghana Limited at Aflao, had pushed up the ex-factory price of a bag of cement from GH¢13.40 to a retail price of GH¢25.
GHACEM, at the moment hold a 55 per cent share of the cement market, while Diamond Cement has a 35 per cent market share.
Greenview International, which imports Dankote Cement and packages it locally, has also been unable to produce due to shortage of raw materials.
Dr George Dawson-Ahmoah indicated that Ghacem’s main pre-occupation was to ensure adequate cement distribution in the market since it recognised the importance of cement in Ghana’s economic growth.
He said the Tema factory would by the end of 2012 have an additional capacity of one million tonnes earmarked to meet the growing demand for cement in the country.
Dr Dawson-Ahmoah, therefore, reiterated that the allegation of monopoly/duopoly of cement in Ghana is unfortunate and misleading, and does not represent the real fact on the ground.
But the World Bank and the association of building and civil engineering contractors of Ghana still want more operators in the cement industry to bring sanity in the pricing of the commodity