– Guyana’s unilateral waiver compounded bad situation
A recent report on the regional cement trade prepared by the TCL Group of Trinidad and Tobago maintains that “unnecessary imports of cement” by Caricom member states including Grenada between September 2008 and August 2009 resulted in an estimated production loss to the company of 357,515 tonnes of cement and a revenue loss of US$30 million.
The report states that during the “waiver period” of September 2008 to August 2009 seven Caricom countries requested waivers of TCL cement imports totalling 715,000 tonnes. It notes, however, that only 357,515 tonnes were imported under the requested waivers and half of the requesting countries utilized less than 50 per cent of their respective waivers. “Compounding the problem of unnecessary imports of cement was the action of Guyana. The unilateral waiver of the CET by this member state encouraged imports of approximately 90,714 tonnes of extra-regional cement, duty free, during the period 2008 to July 2009,” the report adds. According to the report during the period of the waivers “all orders for cement that emanated within the Caribbean were filled by TCL promptly and efficiently.”
The report, prepared by TCL Group Chief Executive Officer Dr Rollin Bertrand, names the controversial Fidelity Investments Inc, which was last year embroiled in a multi-million dollar customs duty evasion scam as one of three companies that were given clearance by the Government of Guyana to import extra-regional cement into the country free of duty. The other three companies which, according to the report, imported cement into Guyana under the unilateral waiver were Anral Investments Ltd, United Commodities Limited and R&R International. Import figures provided in the report indicate that of the four, Fidelity imported the largest quantity, 39,400 tonnes.
The report insists that its production capacity far exceeds the demand for cement in the non-producing countries in the region. “TCL Group, with its plants in Trinidad, Jamaica, Barbados and Guyana can comfortably supply 100 per cent of the demand for cement in the Caricom market,” the report says.
The October 2009 report which contains detailed statistics of cement production and consumption in the region states that TCL’s plant in Trinidad currently produces 85,000 tonnes of cement per month of which 65,000 tonnes are sold locally leaving 20,0000 tonnes available for export. “Production by TCL – after discounting by 20 per cent to compensate for maintenance – could increase up to 89,597 tonnes per month in accordance with the plant’s rated capacity,” the report says.
AT ACCL in Barbados 30,000 tonnes per month is currently being produced of which 12,000 tonnes is sold locally leaving 18,000 tonnes available for export and according to the report ACCL’s production can increase 451 tonnes per month if required. Additionally, the report says that “a conservative estimate” of its CCCL facility in Jamaica indicates that it produces around 90,000 tonnes per month of which 60,000 tonnes is sold on the local market leaving 30,000 tonnes available for export. Currently, CCCL’s capacity is not being fully utilized because of a decline in demand,” the report says. It adds that with the commissioning of the CCCL’s new Mill 5 the company’s rated capacity is now 1,232,976 tonnes of cement per month thus making available 62,876 tonnes per month for export.
According to the report, during the September 2008 to August 2009 period of the waiver, the TCL group could have comfortably supplied 100 per cent of the demand for cement in the Caricom market.
Meanwhile, the TCL Group CEO’s report says that the current trend of declining growth which “is expected to continue until the end of 2010” is expected to precipitate a further decline in the regional demand for cement. “The impact of this scenario is being felt by the TCL Group in both local and export markets within the region. In this situation therefore, the availability of excess capacity by the TCL Group is expected to continue for the medium to long term since regional supplies of cement are expected to exceed demand,” the report adds.
The report says that a significant contributory factor to the company’s current position is its US$177 million investment programme in its Jamaica operations which it says “was implemented with the overriding objective of ensuring that the region would be adequately supplied with cement.” It notes that the completion of its Jamaica expansion programme has come at a time when the construction sector in the region is experiencing significant contraction with no significant indication of a reprieve in the situation.
“…In times of world cement supply scarcity which normally occurs when economies are booming, the absence of a regional supplier will result in disastrous consequences for the region. This should be viewed in relation to the significant investment in plant, equipment and people which the regional cement supplier has just completed.
This investment seeks to guarantee the sustainability and reliability of cement supplies by the region,” the report adds.
– Fidelity Investments named as largest importer