Cement and steel manufacturers in Nepal have defended recent price hikes, attributing them to prolonged load shedding and the depreciation of the Nepali currency against the US dollar. While they have been accused of colluding to raise prices, industrialists argue that power shortages have left them with no choice but to operate at reduced capacity, significantly increasing production costs.

Nepal has been facing industrial load shedding since mid-April after India stopped supplying electricity at night. Although Nepal exports surplus electricity to India during the monsoon, it must import power during the dry season due to lower domestic production. The Nepal Electricity Authority (NEA) has been implementing power cuts in the industrial sector, with manufacturers reporting blackouts lasting up to 14 hours daily.

At a joint press conference held on Sunday, the Cement Manufacturers Association of Nepal (CMAN) , Nepal Steel Rolling Mills Association , and Nepal Yarn Producers Association warned that extended load shedding has pushed their industries to the brink of collapse.

According to Shobhakar Neupane, president of the Nepal Steel Rolling Mills Association , industrial plants are now operating at less than 50% capacity. “We are experiencing over 14 hours of power outage in a 24-hour period, and even the available power is of poor quality,” he said. Neupane added that steel production costs have risen by Rs 10 per kg due to power short supply, while the rising exchange rate has further inflated the cost of raw materials.  

Over the past three weeks, the price of iron rods has surged from Rs 76 to Rs 95 per kg, excluding VAT. During a recent meeting of the Industry, Commerce, Labor, and Consumer Welfare Committee of the House of Representatives, construction entrepreneurs strongly criticized cement and steel manufacturers for allegedly conspiring to raise prices. However, Neupane defended the price hike, stating that production costs have already risen to Rs 98 per kg. "How are we supposed to cover this loss? We have no choice but to adjust prices accordingly," he said. Steel manufacturers have increased rod prices by Rs 10 per kg since March 9.

Similarly, cement prices have climbed sharply in recent months. According to Rabi Singh, President of the Federation of Contractors Association of Nepal, cement prices ranged between Rs 400 and Rs 500 per bag from mid-July to mid-September but have now soared to Rs 760 per bag at the factory gate. Former CMAN president Dhruva Thapa explained that the current price cannot be compared to rates of July and August, as production is significantly lower during that period due to low demand. "Even when electricity was available in July, we lacked storage capacity to stockpile cement. Now, demand has increased, but we are operating at half capacity due to power shortages," Thapa said. He warned that cement production cannot function with just 12 hours of electricity and that even a one-minute outage results in a 45-minute production loss. "This type of load shedding puts the entire industry at risk," he added.

Industrialists, who have often been accused of price manipulation, have now shifted blame to the NEA for unannounced power cuts. The NEA has stated that load shedding primarily affects industries with unpaid electricity dues, including cement and steel manufacturers. However, Raghunandan Maru, chairman of the Cement Manufacturers Association of Nepal, dismissed these claims, demanding that the NEA provide proof.

"How can they accuse us of unpaid dues without evidence?" he questioned. The NEA has previously stated that Maru’s company, Shivam Cement, owes outstanding payments for premium electricity tariffs from dedicated and trunk lines.

Shashikant Agrawal of the Nepal Yarn Producers Association echoed concerns over the severe impact of load shedding on production. "Industries that have cleared their dues are still facing the same power cuts as those that haven’t," he said.

A few months ago, the NEA cut off electricity supply to his Reliance Spinning Mills, citing unpaid bills. Agrawal demanded transparency from the NEA, urging the authority to publish a formal load shedding schedule if it is unable to provide uninterrupted electricity.

"There is constant load shedding in the industrial sector, yet the NEA continues to deny it. Why don’t they release an official schedule instead of misleading the public?" he asked.

Cement, steel, yarn, and other industries require a stable 24-hour power supply, but unannounced outages have severely disrupted production. Industrialists claim that they face prolonged power cuts for nearly six months since mid-December, lasting until mid- June. While the NEA insists it provides full power during the day, manufacturers warn that a lack of round-the-clock electricity will force factories to shut down, turning their products into waste.

The NEA had declared an end to load shedding in May 2018. However, business associations argue that power cuts have continued ever since, with 12-hour blackouts now a regular occurrence. "Even after announcing the end of load shedding, industries have faced continuous power cuts for about six months every year, from mid-December to mid-June. The NEA refuses to admit it and instead engages in misleading propaganda," the three associations stated at their joint press conference.