The Ministry of Tourism, Industry and Commerce is mulling whether or not the government should continue to waive the Common Exter-nal Tariff (CET) on extra-regional cement while TCL Guyana Inc (TGI) is strongly supporting its reinstatement but importers are calling for the waiver to continue.
In March 2004, the government waived the CET on cement following a shortage and has renewed it ever since. The last renewal is set to expire this month.
In a meeting on October 3, Tourism, Industry and Com-merce Minister Manniram Prashad discussed the issue with cement importers at the ministry but since then the ministry has not informed the public about the decisions taken at that meeting if any.
Cement importer R&R International Managing Director Jacob Rambarran told Stabroek News on Wednesday that he was unable to attend the meeting, since he received the notice “half-an-hour before” the meeting that was set for 12:45 pm that afternoon.
Rambarran, however, instructed a representative he sent to “ask for an extension” of the waiver on the grounds that if the waiver is not continued Trinidad Cement Limited (TCL), whose subsidiary is TGI, would have a monopoly.
Rambarran said that based on information he received from the meeting, it was held to ascertain the views of importers and no firm decision was taken.
The TCL cement, this importer noted, was wholesaled to him at $1,514, Value Added Tax (VAT) inclusive, while he is wholesaling the Colombian brand cement for $1,350 VAT inclusive.
He posited that if R&R can import cement from the Dominican Republic and sell it cheaper then TCL, “why can’t TCL lower” their prices?
This importer told Stabroek News that he has asked the company on a number of occasions to lower their prices since Guyana is a price market and consumers do not have large disposable incomes. The most the government can do, he said, is to ensure that cement is here to continue the boom in the construction sector. “It is in Guyana’s interest to keep prices low.”
Cheaper sources
of cement
He also stated that if the government does not keep cement prices low it would be inconsistent with its move to open the flour market to lower prices and to allow the importation of chicken to lower prices.
Rambarran is of the view that paying around 20% CET plus VAT on imports would be too much for importers like him.
One large user agrees with Rambarran. He explained that there are a number of cheaper sources of cement on the market which are “just as good.”
This user no longer utilizes TCL cement because of its higher prices compared to other imported brands. The last price that this user bought the TCL cement for wholesale was $1,425 excluding VAT and now buys the Colombian brand cement for $1,390 VAT inclusive. And depending on the quantities of cement bought at distributors the prices would vary.
TCL Guyana Inc (TGI) Plant Manager Mark Bender in relation to the issue of price that Rambarran raised noted, “That is just his view,” while saying that in principle once TCL can satisfy demand, the CET should be implemented. This plant manager also contended that price “is not the major issue,” and it is a matter of principle.
Nevertheless, he assured that as a matter of policy the company “believes in stable prices.” According to Bender, the wholesale price at the plant are $1,227 excluding VAT.
He said that TGI began operating in January and has the capacity to adequately satisfy the market with cement. In June, TGI’s US$10.3M bagging plant was commissioned with three storage silos having a combined capacity of 6,000 tonnes and a bond with a further 2,000 tonnes storage capacity.
Bender declined to say what capacity the plant is currently operating at, but said that TGI is bagging what the market demands. At full capacity TGI can bag 30,000 tonnes of cement per month. He puts the demand at 12,000 tonnes per month. However, over the years many have questioned this figure since it is believed to be higher.
Bender agreed that the monthly demand “may be higher or lower” but he believes this is the average consumption.
In a letter to the government this week, TCL contended that the administration would appreciate the company’s position with regards to the CET, since the country is advocating the implementation of the CET on imported rice from the US into Jamaica. The Jamaican authorities are contending that the US rice is cheaper and they buy a large percentage of the island’s rice supply from the US rather than Guyana, which has the capacity to supply.
“We are trying to make the point,” said Bender, “that based on the capacity of the plant the CET should be re-implemented since it is a “principled position” and the rules of the CET are about ability to supply not price.”
TCL’s market share in Guyana is somewhere around 50%. The company also contends that prior to the waiver there was price stability and after the waiver there was price instability and price gouging. In a full page advertisement on Wednesday TGI also said that, “A decision to re-implement the CET will justify the demonstration of good faith by the TCL Group in investing in Guyana and will be a positive message to other CARICOM countries and companies as well as extra-regional investors.”
“A decision to re-implement the CET will be a demonstration of support for Guyanese labour as all management and staff of TGI are fully-trained Guyanese,” said the advertisement.
At the moment TCL cement is being retailed for $1,624 VAT inclusive per sack at Toolsie Persaud Ltd, which owns a 10% stake in TGI, a decrease from $1,700 back in June. And at Anral Invest-ments Ltd, which also holds a 10% stake in TGI, TCL cement was retailing for $1,600 per sack VAT inclusive, a decrease from $1,650 in June and Colombian cement for $1,395 VAT inclusive per sack, a decrease from $1,500 in June.
At Barrow’s Hardware and General Store in Linden the Colombian cement was retailing for $1,688 per sack VAT inclusive, a decrease from $1,740 in June and TCL $1,970 per sack VAT inclusive. In early June Barrow had no TCL cement in stock.
