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Jan 2017 Cover Story

Published on: 2017-01-22 15:48:08     2365 times read    0  Comments

“Nepal will be self-sufficient in cement within the next two years”

Er Dhruba Thapa President, Nepal Engineers' Association President, Cement Manufacturers' Association, Nepal Executive Director, Cosmos Cement Industries (Pvt) LtdEr Dhruba Thapa
President, Nepal Engineers' Association
President, Cement Manufacturers' Association, Nepal
Executive Director, Cosmos Cement Industries (Pvt) Ltd

Despite the odds, the Nepali cement industry has been showing strong potential. What are the factors driving this healthy growth? 
Nepali cement manufacturers started their business at a very hard time during the Maoist insurgency around 15-16 years ago. They are still facing a lot of problems. Nevertheless, gradually with the increasing market the number of factories increased. 

There are several contributing factors as to why it's growing. Cement has high domestic value. In the past, even though the demand for cement was low, it was slowly increasing. So investors set up grinding plants based on the Indian clinker system. Comparatively, running a grinding plant is also easier. As demand grew, industries started expanding. Meanwhile, large limestone sites were identified across the country. Likewise, the government also prioritised cement industries declaring it as a policy to provide access roads and power transmission line facilities to mining and plant sites to set up new industries. Also the grim scope faced by other industries led most investors who had started grinding plants to set up integrated cement plants (with clinker production). Meanwhile, the government policy directing cement industries to utilise domestic clinker also encouraged the investors to start clinker production plants giving a kind of assurance to the market. 

Nonetheless, it is extremely difficult to run a cement industry in this country. At times we regret being involved in this sector. However, we hope the future gets better.

How much cement is wanted annually? And what's the difference between domestic supply and imports?
About five million tonnes of cement yearly. However, though the installed capacity of Nepal's cement industry is more than the demand, around 80 percent of the demand is being fulfilled by domestic production and the remaining 20 percent is imported mainly from India. Regarding clinker production, 70 percent is being fulfilled by domestic industries and the remaining imported from India. It is expected that in two years the total demand for clinker will be met through domestic production.

In fact we are proud and happy that Nepal is becoming self-sufficient at least in cement. This may be one of the very few commodities in which our country will be independent. This will also decrease the swelling trade deficit by Rs 60 billion. 

About the rate of capacity utilisation in this industry, what's your estimate?
The average capacity utilisation of the overall cement industry is around 55-60 percent of the installed capacity. However, some plants might be at 65 percent and some at 45 percent.

How long till Nepal becomes self-reliant in cement?
I hope we will be self-sufficient in cement in the next two years. 

How many cement factories are producing clinker. And when will we be self-sufficient in it? 
Around 15 industries are producing clinker at present. A few others are under the process of commissioning clinker plants within the next two years which will lead the country to self-sufficiency in terms of clinker production.

The government has said the industry must produce all the clinker by the end of 2073. How close or far away are the manufacturers from this target? 
In my opinion, this matter is completely irrelevant. Firstly, the government has just instructed the industries to utilise domestic clinker but has not enforced all grinding units to produce their own clinker. Making it mandatory to produce our own clinker will complicate the matter for the industry. So in this case, there must be factories to supply sufficient clinker in the market and anyway, we don’t have sufficient clinker production yet to feed all the grinding plants. Either the government should facilitate the industries to produce sufficient clinker or else allow the import of it, in our case mainly from India. So, unless we are self-sufficient, there is no possibility of stopping clinker imports. However, as Nepal should be able to produce sufficient clinker within the next two years, this matter will be automatically resolved. So the government needs to rectify such policies which just create ambiguity instead of streamlining national issues.

What do you make of cement factories setting up their own captive hydropower plants? 
It is not impossible if proper policies are implemented. I have heard that the policy of hauling electricity through the NEA grid is coming soon. We will start thinking positively about this if such a policy is implemented. 

What are the other challenges? 
The major problem besides power is land acquisition. Getting approval from the government to acquire more than the permitted area of land (i.e. haadbandi swikriti) is also a very hard task. Similarly, getting approval from the forest department to run the mines is another challenging task. A lot of local problems have to be faced by all industries because of non-compliance to the rule of law. A non-conducive labour law, frequent and irresponsible strikes called by different political parties are also major hurdles. In fact, we feel that none of the acts, laws and rules of the state seem to be industry-friendly.

Why does cement cost so much here compared to other SAARC countries? 
Yes, the cost of cement in Nepal is the highest amongst the SAARC countries. High transportation cost in cement production is one of the major cost contributors. All our limestone quarries are in mountain areas where no infrastructures available. This makes setting up plants near the quarries extremely difficult. So the landing cost of limestone at factory sites that are away from the mines is high. 

Similarly, cement production is a continuous process and requires an uninterrupted power supply. It is also a high energy consuming industry. But with no power, industries are forced to run the plants on diesel generators which obviously increase the cost of production.

The cement industry is basically a coal fired industry which needs a high quantity of coal as fuel (around 20 percent of the produced clinker). The landing cost of coal is also very high due to various factors including transportation, custom duties and multi-point handling which adds up the production cost of cement. Multiple-taxation is also a cost contributor. 

Apart from these, there are many other hassles in production right from the mining of limestone to supplying the cement to the end customer. This is mainly because the existing rules are implemented weakly. If we can improve these factors and increase the market competitiveness of our products, there is the possibility of exporting our cement to the bordering areas in India. In this context, the potential exists to even export cement to Bangladesh.

 

“Lowering the customs duty on the import of raw materials will bring down cement prices”​

Anil Kumar Agrawal  Managing Director Shree Cements IndustriesAnil Kumar Agrawal 
Managing Director
Shree Cements Industries

How is the growth of the Nepali cement industry?
The cement market is growing despite the problems being faced by the industry. The industry can flourish more if infrastructure development speeds up. The opportunities in this sector can expand if we can start the phase of economic transformation which the parties promised after the promulgation of the new constitution.  Most of the cement industry in Nepal is for the domestic market although large investments could be made in this sector. Overall, there is a lot of potential in the cement sector despite the problems.   

What is the annual cement demand in the country? How much of the demand is met through domestic supply and through imports?
With the capacity for production increasing, we will be able to grab a stronghold in the supply of cement in the coming days.  I don’t think there will be a shortage of cement in the domestic market.  The cement produced here is marketed and used within the country. The cement industry is meeting over 80 percent of the market demand. If infrastructure development gathers pace, the industries will increase their production capacity as they are more than able to meet the demand.  

How much is the capacity utilisation of cement industries?
It depends on the status and location of the industry. Many cement industries have opened from the east of the country to the far-western region. Factors including the variation in the cost of production, market accessibility, ease of transport and supply affect the capacity utilisation of the industries. Overall Nepali cement factories have been producing a bit more than 50 percent of their current installed capacities.

How long do you think will it take for Nepal to become self-reliant in cement?
We are nearly self-reliant in cement production. The growing competition in this sector has been the main contributing factor for the increased quality. New technologies are being introduced to produce cement. 

The production of clinker has also been rising. Domestic production is meeting most of the demand here. With production increasing, the number of cement plants is also growing. As all industries are expanding their production capacities, it won't take much time for Nepal to become completely self-reliant if this situation continues. In a few years, it will be possible to stop all cement imports. 

How many of the operational cement factories produce clinker? How far behind are we when it comes to becoming self-sufficient in clinker? 
Some industries are producing clinker at present. Most cement producers rely on imported raw materials. It is not difficult for us to become self-reliant regarding clinker production if the government supports and encourages us by showing a willingness to develop proper infrastructure. 

The government has already directed cement manufacturers to produce all the clinker they need by the end of 2073. Are the manufacturers meeting this? 
It is good to become self-reliant in clinker. However, it should not be imposed. Failure to meet targets has proved that the policy is wrong. All cement industries might not be able to meet the target. They should be allowed to work as per their own needs. This is the core concept of the free market policy. Only those who are able to compete can be established. So, I think all options should be kept open. 

Lack of continuous power supply from the grid has been a major hurdle for cement industries. How do you view the possibility of cement factories setting up their own captive hydropower plant, if the government changes its rule to allow this? 
Setting up captive hydropower plants would cost us a lot and the direct effect will be seen in the cement prices. Since the government has said that there will be no shortage of electricity in the next few years, the industries do not need to invest their money in setting up captive hydropower plants. Nevertheless, if the long hours of power cuts continue, we need to work on it. At present, the cement industries do get power from alternative sources. 

Why is cement produced in Nepal priced higher than in any other SAARC country? 
The question is relevant. The raw materials imported here to produce cement are taxed high and the transport costs too are high. Due to this, clinker producers sell their products at high prices. Otherwise, clinker should cost half than what it does now. Lack of adequate supply of power and expensive labour are also contributing to the high cement prices in the local market. 

How can we lower the production cost?
Almost all of the Nepali cement factories import raw materials from India. We want these raw materials to receive the same import facilities which other raw materials for other products get. At present, the customs duty on a metric tonne of clinker is Rs 2,400. The taxes go up when VAT is added. Similarly, a metric tonne of Fly Ash used for dissolution is taxed at Rs 1,000. In India, a metric tonne of Fly Ash is available with an Indian Rs 200 government grant.  

The customs duty is a maximum five percent for raw materials used by industries of other sectors while it’s over 25 percent for raw materials for cement. Currently, the customs duty is just Rs 120 for a sack of cement. Though the price of raw materials fluctuates in the international market, the government never reduces the duty rates. Addressing these problems will help lower the price of clinker. Likewise, if the issues related to energy, transport cost and labour are solved, customers will get cement at comparatively affordable prices.

Nepali cement producers have been questioning the practicality of the standard set by the government to measure the quality of products. Is it wrong to set the quality standard for the cement?
Maintaining quality of products is the most essential aspect for any business. It is also important for an industrialist to sustain the market competition. The quality of products should be regulated. And, if the products do not meet the criteria, legal action against the producers should be taken. Meanwhile, the inspection process should be transparent. Factories should not be closed in the name of inspection and regulation. As closing down the factories is of no benefit to both the government and the industrial sector, a practical approach should be taken to solve the problems. 

 

“Nepal is importing cement because domestic companies are not allowed to label their cement higher than grade 33”​

Ashok Kumar Baid, Director  Nepal Shalimar CementAshok Kumar Baid
Director 
Nepal Shalimar Cement

What factors are contributing to the sound growth of the Nepali cement industry despite the various odds against it?
Cement production in Nepal has been growing sharply over the past few years. The industry is among the country's most flourishing business sectors as the demand for cement is constantly rising.  The reasons are many. Firstly, Nepal being an underdeveloped nation has huge potential for growth which includes the development of infrastructures, roads and other large projects. Secondly, Indian cement is expensive here as the railway freight from India is high and the price of cement was also increased there recently. Thirdly, Nepal itself is developing with many new factories being established, which require huge quantities of cement. The cement industry has been growing at around 10-15 percent every year.

How much cement is demanded in a year? What's the difference between domestic supply and cement that's imported?
The annual demand stands at around 10 million tonnes. Approximate 85 percent is fulfilled through domestic supply, and the rest is imported.

What about the industry's rate of capacity utilisation?
That stands at only 50 percent at present due to the shortage of power. 

Over the years, we have talked about becoming self-sufficient in cement production. How long will this take?
Nepal is self-sufficient in cement if capacity is taken as a measure. Our nation is importing cement because domestic companies are not allowed to label their cement higher than grade 33.  Moreover, custom rebates exist for International competitive bidding. 

How many cement factories produce clinker? Can we become self-sufficient in clinker production?
There are over 45 cement industries in the country. Only around a dozen of them produce clinker on their own. The remaining ones procure clinker from domestic cement industries while also relying on imports from India.

Will cement manufacturers here produce all their clinker by the end of 2073 BS as directed by the government?
Though we are becoming self-sufficient in cement, only a few industries manufacture clinker. Many industries are not able to produce clinker due to geographical, political and environmental issues. I think Nepal will be self-reliant in clinker within the next five years if things improve.

Is it possible for cement factories to set up their own captive hydropower plants to get the electricity they need if the government approves it?
It is not as easy as it sounds. It depends a lot on where the industry is. Also, labour and political instability will further obstruct it.

What are the other challenges for the Nepali cement industry? 
There are many challenges faced by the cement industry at present. Insufficient supply of power is the major one followed by labour issues, government policy regarding the grading of cement bags and other work, transport syndication, inadequate road connectivity, among others. These are issues for other industries as well. However, we are hoping that the government will solve the problems soon and make it easy for all the domestic players. It would be good for us as a nation if we have products that we do not need to import and that we can be self-reliant.

Why is cement so expensive in Nepal compared to other Saarc nations? 
Power shortage is a big deal regarding the price as it increases the cost of production of cement by around Rs 25-40 per sack. Also, the customs duty on raw materials is quite high, mainly in the import of clinker. 

 

“It will take at least 10-12 years for Nepal to become self-reliant in clinker and cement production”​

Rishikesh Agrawal, Director Ambuja CementRishikesh Agrawal
Director
Ambuja Cement

The Nepali cement industry has been flourishing despite all sorts of problems. What are the factors driving this healthy growth?
The major factor is the growing market demand for cement. Consumption is increasing fast as the purchasing power of Nepali consumers has been growing. Previously Indian cements were widely used in the country and that has now been substituted by Nepali cement in the last few years. Producers here are focusing on quality products on par with India produced cement.

What is the annual cement demand in the country? How much is met through domestic supply and through imports?
It should be around eight million tonnes annually.  The demand has been growing at a rate of 15 percent annually. Approximately 80 percent of demand is met through Nepali cement industries. Nevertheless, the raw materials to produce cement are mostly imported from India.

How is the rate of capacity utilisation in this industry on an average in your estimation?
In the cement industry we divide the market into three seasons. First is the off season which starts from the beginning of July and ends in mid-November. Second is the mid-season starting from the second half of November to mid-March.  Thirdly, it is the peak season which starts from the second half of March and ends in the second half of June. In the offseason, the utilisation is less, as per my estimation not more than 60 percent on average. In the mid season, it jumps to 70 percent and in the peak season, it goes up to around 80 percent. The overall utilisation in a year is 65-70 percent as per my estimation.

It’s been quite a few years since we started talking about becoming self-sufficient in cement production. However, this is a goal which we are yet to realise completely. How long will it take us to become self-reliant in cement?
Nepal has enormous potential to be self-reliant as we are blessed with natural resources. We have huge limestone reserves across various locations in the country. The limestone mines can be utilised to produce clinker which is the major raw material for producing cement. Nevertheless, these limestone mines are in remote locations. We lack proper infrastructure such as roads and electricity in these areas to utilise the resource. I think it will take us at least 10-12 years to become self-reliant in clinker and cement production if the development of infrastructure speeds up and effective policy support is in place.

How many of the operational cement factories produce clinker and how far are we behind when it comes to becoming self-sufficient in clinker?
There are around 10 clinker plants in Nepal at present. The total production of these plants is about 15,000 MT per day which is equivalent to 3.5 million MT annually. The current production amount does not even meet 50 percent of the requirement. But there are 4-5 more clinker plants which are under construction currently. But still it will take another 10-12 years to become self-reliant in clinker as the demand has also been increasing.

The government has already directed cement manufacturers to produce all the clinker they need by the end of 2073 BS. Is this feasible?
Given the constraints I have already mentioned, it is almost impossible to achieve this milestone in such a short time. If every support is in place, the target can be achieved by 2080 BS.

The lack of continuous power supply from the grid is a major problem for the Nepali cement industry. So what about cement factories setting up their own captive hydropower plant, if the government changes its rules to allow this?
As I mentioned earlier, we divide capacity utilisation of the cement industry into three different seasons. Cement industries demand more electricity during the peak seasons. Hence, the electricity produced during this time can be used by cement mills. But if the government purchases electricity produced from these hydropower plants at a genuine price during mid-season or off season these projects can be viable.

What are the challenges, besides the power deficiency, being faced by the cement industry? 
Frequently occuring strikes, local disputes, lack of skilled manpower, availability of proper road networks, logistical issues such as lack of trucking availability during peak seasons are some of the other major problems faced by Nepali cement industries.

It’s said cement is costlier in Nepal than in any other SAARC country. Why is this?
Yes, this is a fact. There are two main reasons for this. One is the lack of electricity. Due to the shortage of power, most of the clinker and grinding units have to operate their plants with alternative fuel resources such as diesel generators which are at least five times more expensive than power supplied by NEA. The improper supply chain management is the second contributing factor. Logistics is a very vital part of any industry and it plays a very big role particularly in the cement industry. Most of the limestone mines as well as many of the cement grinding mills are quite far from the market. Similarly, clinker units in India are also very far away for us. Most of the clinker plants in India are either in states such as Madhya Pradesh or Rajasthan. This keeps on adding to the costs until the cement reaches the local market. In India, the logistics cost in overall cement manufacturing is not more than 10 -12 percent which is roughly around 20 percent in Nepal. Likewise, another reason for costlier cement is the higher rate of taxes and duties. Local taxes are quite high for extracting limestone and custom duty is also very high for importing clinker. 

 

“Nepal needs to produce 100% of its clinker requirement to be self-sufficient in cement”

PK Sarkar, Vice-president Jagdamba cement IndustriesPK Sarkar
Vice-president
Jagdamba cement Industries

The cement industry in Nepal has been flourishing despite all the problems. What's behind this growth? 
The Nepali cement industry is growing strong due to the increased demand post-earthquake. In addition, some major projects in hydropower and road network expansion and other construction initiatives taken by the government have been contributing to the growth. Meanwhile, the government has also been encouraging entrepreneurs to set up cement industries here.

How much cement is sold yearly? And how much of this demand is met through domestic channels and imports?
The current demand for cement in Nepal is estimated at five million tonnes annually. Out of this, 4.5 million tonnes come from domestic manufacturers, and about 0.5 million tonnes imported.

What is the rate of capacity utilisation in the Nepali cement industry on average?
The present capacity utilisation on an average is 70 percent of the total installed capacity. Only a very few cement plants are still operating at full capacity. This is basically due to the established brand names and consumer demand for the brands. 

How long do you think more will it take us to become self-reliant in cement?
Self-sufficiency in cement does not necessarily mean when domestic manufacturers will finally be able to cater to the total cement demand in the country. To be able to become self-sufficient, first the country needs to produce 100 percent of the clinker here which is the basic raw material for cement. Unfortunately, the scenario is quite different at present. Our cement plants are heavily dependent on imported clinker mainly from India. Even many of the plants that produce clinker import the essential raw material as well. Once we fulfill the need for clinker internally within the country itself we become self-sufficient in cement.

How many cement factories produce clinker. Will we be able to soon produce it solely here? 
At present, 48 cement plants are operating in the country. Out of them, 14 plants have their own clinker production facilities. The increasing demand for cement is leading to the rising import of clinker. For example, there has been a 770 percent jump in clinker imports in the four months of Shravan to Kartik in 2073 BS compared to the same period the previous year. In cash terms this is an import of Rs 6.58 billion compared to Rs 850 million in the same period. So it appears that self-sufficiency in clinker is still a long way off.

The government has set 2073 for the industry to produce our own clinker. Will this be met? 
 Giving some direction and making ways to implement such directions are two different things altogether. Clinker mines need to be developed first. Most of the mines are owned by the government. The road block starts here. It is very difficult to get approval from the Ministry of Forests to develop mines and make approach roads etc. So the manufacturers find it easier to import clinker and simply to grind the same and fill cement bags. Every year Nepal imports nearly four million tonnes of clinker. We can mine the limestone within the country if the government formulates flexible policies and encourages mining.

The power shortage has made some cement factories think about setting up their own captive hydropower plant. If the government says ok, what will happen? 
Clinker plants are power intensive units. So unless power is available in the national grid continuously, it is next to impossible to produce clinker. A few plants have installed coal powered plants to overcome this difficulty. But running clinker plants solely on diesel generators is a costly affair. Cement companies having their own captive hydropower plants may not be a feasible solution to go for. Since the hydropower projects need a lot of investment, cement plants and hydro power plants cannot be in the same vicinity due to the many problems in logistics. Then there is the question of transmitting the electricity to the cement plants. Who will bear the cost of transmission lines also is a question which requires an answer. So cement manufacturers having captive hydro projects seems to be a long shot.

There is the power shortage. What are the other problems? 
Currently, other than the power outage, the major challenges are underutilising factory capacity, restriction on mining, pollution norms, lack of roads and infrastructure in and around cement plants and location of plants in the proximity of world heritage sites.

However, the cement industry will be facing one major challenge in the near future which is demand versus supply. At the rate cement plants are coming up, it does not give a very optimistic picture for the coming days.  74 plants are registered in the Department of Industry. Out of these, 48 are in operation. Six major plants including that of the Chinese company Hongsi are in the pipeline. Major current players are expanding their production capacity. Within the next four years the total installed capacity of Nepali cement industries will be approximately 8.5 million tonnes. Meanwhile, the estimated cement demand will be 6.5 million tonnes only. So, in that scenario, it will be difficult for producers to sell their products. Export as of date, mainly to India, is not a possibility as the production cost itself is higher here.

In the entire South Asia region cement is the most expensive here. Why? 
Nepali cement is costlier due to pricey power. Thanks to the power outage, all cement plants are forced to operate on diesel generators or alternative power sources. The import of clinker is another factor which adds up the cost. Higher transportation costs due to the terrain and poor road/rail connectivity also contributes in this regard. 

 

“The environment remains full of doubt for cement sector investors due to political instability and recurring strikes”​

Anuj Keyal,  Director Star Cement Udhyog Pvt LtdAnuj Keyal 
Director
Star Cement Udhyog Pvt Ltd

What do you think are the factors driving the healthy growth of the Nepali cement industry despite the problems? 
Overcoming the fear of challenges is important to work properly. Focusing on employing appropriate tactics to solve the problems is important if we really need to work. Nonetheless, all problem solving initiatives have to be taken alone by the private sector in our country. The government has not been providing enough of its support regarding the solutions to the existing problems to create an environment conducive to the business. Despite the various hurdles, the Nepali cement industry has been performing well. Investments have been rising in recent years and many new factories have opened. Similarly, the cement market is also growing. The potential of the cement industry is being fueled by the increasing development activities. If we are able to optimally utilise the existing possibilities, there is potential for the expansion of factories and the market.

What is the annual cement demand in the country? How is this demand being met?
As per industry estimations, the demand has been increasing by 15 percent every year. The domestic cement industries have been supplying 80-85 percent of the total demand at present.    

How is the rate of capacity utilisation in this industry on an average?
Nepali cement industries are not being able to run as per their capacity. The main problem is the lack of electricity due to which the industries are not able to fully capitalise their potential. Similarly, problems in supply of raw materials and issues related to labour and transport also hinder us from time to time. 

Competition is growing in the market and investment in the sector has been rising. Just producing more cement won’t help. The market should consume the products too. Due to such reasons, the domestic cement industries have been producing only at 50 percent of their capacity.   

It’s been quite a few years since we started talking about self-sufficiency in cement. But this is a goal which we are yet to realise completely. How long will it take for us to become self-reliant in cement?
Talking about self-sufficiency is easy. But to create a viable ground for it and solving the related problems related are really challenging. The regulations need to be business friendly in order to become self-reliant. Presently, the development projects with foreign investments use imported cements for construction works. The government has been providing concessions on customs duty regarding the import of cement for such projects. Domestic industries, nonetheless, are not helped by any kind of motivating policies. Due to this, even though the industries can adequately supply the local market, they are not able to utilise their capacity fully.  Improvement in the policy level as well as the mentality of the government is required for the Nepali cement industry to foster further. 

Much of the clinker is imported to produce cement at present. How far behind are we when it comes to becoming self-sufficient in clinker? 
Among all the cement industries, only 7-8 are producing clinker. Even among them, not all are able to fulfill the demand. Almost all the industries depend on the imported raw materials. Last year the majority of cement factories were forced to shut down due to the lack of raw materials during the strikes in Terai and border blockade. This situation is clear evidence that we rely on imported clinker. It is not that we do not have the potential to produce raw materials. However, the lack of infrastructure and limited investment hinder us. This stops us from becoming successful in terms of clinker production sooner. 

Do you think that cement manufacturers are able to produce all the clinker they need by the end of 2073 as per the government directive. How achievable is this? 
As I said earlier, making announcements and implementing them successfully are two different things. Though the government has announced it, it has discouraged us in terms of infrastructure management. We have not been facilitated with mining sites, road access and transport facility to the sites alongside proper arrangement of energy and communication. Establishing clinker plants demands high investment. Despite lucrative opportunities in the cement sector, the environment remains full of doubt for investors due to political instability and recurring strikes. 

Are there any possibilities that cement factories can set up their own captive hydropower plant, if the government changes its rule to allow this? 
We are not capable enough to manage our energy needs. Setting up captive power plants requires large investment even if the government comes up with policy provisions in this regard. I don’t think that average cement industries have the potential to invest in their own hydropower plants. 

What are the other challenges, besides the power shortage, being faced by the cement industry? What about the government rules, investment from banks etc?
Whatever development the Nepali cement industry has seen is due to the initiatives of the private sector. The government has not done much. In the Indian state of Bihar, for instance, cement producers are receiving a grant up to 40 percent from the government. Our government, meanwhile, is not even trying to learn from the positive practices of our neighbouring country. What else can we hope from a government which has not been able to provide industries with the much-needed power? 

There are various transport related problems for Nepali cement producers.  Similarly, many difficulties in tax and customs exist. The mentality of the government and the bureaucracy has been to not let industrialists work smoothly. The government and its bodies do not know how to honour the investors. It is important for the government to change its mentality along with the policies and regulations. 

What are the reasons for the high price of cement in Nepal compared to other SAARC countries? 
The inadequate supply of power is the main reason. The cost of production obviously gets high when we produce cement using diesel generators. Imported raw materials, high customs duty and taxes alongside swelling transportation costs all add to the cost of production. Meanwhile, the cost of labour in Nepal is also the highest compared to other SAARC countries. 


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