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Tuesday, July 5, 2022

Hike in the prices of building materials… Importers ask for more time to reduce prices

By Jariatu S. Bangura

Importers of both cement and iron rod have appealed to the Parliamentary Oversight Committee on Trade and Industry  that they should be given more  time  to reduce their stock, so that they would not incur huge loss  that will affect future importation.

The main opposition Member of Parliament of the All People’s Congress (APC), Hon. Mark Mahmoud Kalokoh, had noted that certain percentage on the importation of  certain commodities were reduced by Members of Parliament during the debate on the Finance Act of 2020, but that such was yet to reflect in the market.

He said the percentage on the prices of iron rod and cement were reduced from 20% to 10%, but that the prices of the said commodities continue to increase.

He demanded that the minister of trade provides reasons for the hike in the prices of those commodities.

As mandated by the Speaker of Parliament for an investigation into the issue, a report was presented by the Parliamentary Committee on Trade headed by Hon. Veronica K. Sesay.

According Hon.Veronica K. Sesay, her committee sent out questionnaires to various cement and iron rod business dealers, which were later returned with details as required by the committee.

She said importers said  they have huge stock of iron rod imported since November 2021, when custom duty  was at 10% and that it would be an economic disaster for them should they sell the over 80% of their stock below the prices measured above.

Dangote is one of the leading importers of powder cement that is packaged into 50kg bags and it deals with only 42.5 grades. In the completed questionnaire, the management of Dangote disclosed that the company was unaware of the Finance Act 2022 with particular reference to the subject of discourse.

Management further disclosed that the company had imported under the Finance Act of 2022 customs duty regime and that the price of cement was Le 94,000 including 15% GST and Le81, 739.13, excluding 15% GST per bag.

They noted that notwithstanding the 10% reduction of customs duty for the cement, they would not be in a position to sell a bag of cement below Le92,000 when it next shipment arrives due to challenges of accessing foreign currency and its price, rise in FOB price of cement, slow decrease in freight cost and increase in the world market.

Also, LEOCEM Cement Factory which is now under the management of Diamond Cement Group, is the only local cement producer that produces both 32.5 and 42.5 grades respectively.

Responding to the questionnaire, the management revealed to the Committee that when it took over the company, it inherited sales orders of about 300,000 bags and pending supply receipts close to 300, 000 .

As at the time of completing the questionnaire, management was on the verge of completing the inherited supplies and therefore not selling to the public until late February or early March.

The completed questionnaire submitted  also disclosed that management was aware of the provisions of the 2022 Finance Act relating to the reduction of custom duties of cement, but didn’t  benefit from the reduction when its consignment of raw materials to compliment the production  were cleared. The questionnaire reported that the company paid over 20 % custom duties.

With respect to the factory price per bag, the company would start selling at Le 84,000 (32.5) including 15% GST and Le71, 400 excluding 15% GST with a firm promise for a downward review.

Mackie Cement Industry, is a leading importer of cement (42.5 grades) in bags of 50kg and jumbo bags of powder that is repackaged in 50kg at its cement plant at Bomeh.  Like other importers, the completed questionnaire reported that the company was not oblivious of the customs duty reduction on cement and confirmed that since January the vessels had arrived and off loaded huge quantum of cement, while another was on its way.  

The company also confirmed that it benefited from the new custom duty applicable for cement.

On pricing, the company had set out two prices which are (Le 86,000 at the Queen Elizabeth Quay including 15%% GST and Le 88,000 at the packaging plant at Bomeh including 15% GST) which can be reduced in due course respectively.

They said the Le 2,000 difference covers the transportation of the cement from the port to the plant location.

However, Fawaz Building Materials, too, being a household name in importing building materials in Sierra Leone and cement, is no exception.

The management of Fawaz reported that the building materials first consignment of cement (42.5 grades) in 2022 was at the Queen Elizabeth II Quay off-loading with a wholesale price of Le 89,000 and Le 90,000 for large and small quantities, respectively.

The Committee observed that there was price disparity between Fawaz and other importers and in clarifying that disparity, the questionnaire submitted to the committee explained that Fawaz sells at its warehouse at Ferry Junction and not at the port.

It further explains that the applicable custom duty was 10% + 15% GST unlike others whose applicable custom duty was 5% + 15% GST.

Al Hamd Enterprise is also a prominent company in the importation and selling of building materials. But with the importation of cement, the company is a new player whose first ever consignment arrived in mid- January 2022 and it was sold at  Le 94,000 at the port and Le 92,000 at its warehouse situated at Grassfield, Bai Bureh Road.

The questionnaire indicated that since the company had depleted its stock before the engagement with the committee, the company could not pinpoint the wholesale price until its next vessel arrives.

However on the issue of iron ore, the committee sent out questionnaires to different importers of iron rod and the prices of iron rod were as follows: half inch (11 mm consist of 84 lengths) was sold at Le 8,500,000, and 5/8 (15 mm consist of 48 lengths) was sold at Le 9,000,000.

Thus the Committee recommended for further engagement with the Ministry of Trade and Industry and the Business Community for further deliberation on the aforementioned issues.

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