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Dear Editor,
In his latest appearance in parliament, the Prime
Minister responded to an allegation by a
parliamentarian from the House on the price increase
of cement by the state enterprises. The concern
raised was that the “increase in production cost is
due to hikes in fuel prices.” This is not the case,
in fact, the weight of fuel as an input in the
production of cement is very low (generally less
than 15pc). It is therefore difficult to simply
explain the recent 30pc increase in the price of
cement by the state monopolies in such a fashion.
Close observation reveals that the cement industry
has come to be very lucrative these days in this
country, due to the great demand for cement as a
result of a boom in the construction industry and
the subsequent shortage of supplies.
A sharp rise in the price of cement from 65 Br to
175 Br per quintal has happened locally. This
translates to a nearly 300pc rise during the past
three years, yet the price in the international
market is below 90 dollars per tonne (88 Br per
quintal) despite the depreciation of the dollar.
This is the reason why the better quality of
imported cement from Far East Asia is available at
competitive prices (155 Br per quintal), despite the
fact that importers pay enormous sea freight and
inland transport costs (nearly 80 Br). Here, it has
to be noted that production costs in Ethiopia are
the same as those around the globe.
On the other side of the cement industry, the
turnover for the few local manufacturers has shown a
significant increase in annual revenue, recording
profits as high as 90pc consistently in these past
few years. The same turnover is expected this year
as the manufacturers have made another momentous
raise in their prices. There is no reason why
retailers should be accused of greed while the state
monopolies are milking huge legal profits from the
sector rather than acting as roles models in the
fight against the prevailing inflation in the
sector.
In fact, who else can be blamed for this annoying
increase in the price of construction costs other
than the state monopoly, Muger and the endowment
Mosobo? Obviously no one but them.
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