Contractors: TCL cement price increase puts strain on construction sector
The Trinidad and Tobago Contractors’ Association (TTCA) has warned that Trinidad Cement Ltd's (TCL) price increases will place the construction industry under even more strain as the economy tries to recover from the covid19 pandemic.
TTCA president Glenn Mahabirsingh on Tuesday said the sector was already under enormous pricing pressure because of the impact of the pandemic, having already seen price increases in steel, timber, electrical materials, PVC, and aggregate.
He said, “Cement is one of the basic and most critical ingredients in construction. Contractors have been placed under extreme pressure in trying to deliver with volatile material prices.”
On Monday, TCL announced the price of Premium Plus cement will increase by 15 per cent and Eco-cement by eight per cent, due to increases in input costs as of December 20. TCL manager Reshma Gooljar-Singh, in a letter to stakeholders, said the company can no longer maintain its prices because of the price hikes in natural gas, imported spares and raw materials used to manufacture quality cement. In a price list sent out to customers, TCL said a 42.5 kg bag of Premium Plus and Eco-cement will increase respectively from $41.39 to $46.56, and from $38.85 to $43.71 VAT-inclusive.
Mahabirsingh said construction has been identified by the Government in its covid19 recovery plan to revitalise the economy, but the strain in obtaining materials and now cement will force contractors to dial back on projects.
As for government projects, he pointed out contractors will have to absorb unsubstantiated losses because specific clauses in contracts did not allow for the renegotiation of fees.
Mahabirsingh said state enterprise contracts were based on international guidelines and diverging from them can increase the risk and project output.
“The construction sector is definitely one that could stimulate the economy but with the new increase it would be difficult for contractors to go back to their clients to negotiate compensation.
“During the tendering stage contractors would have made allowances for fluctuations but not at these levels. It would bring difficulty in going forward. The cost of not continuing with projects would be greater.
“There is a clause that talks about adjustments in changes in cost and within the state enterprise projects that clause is deleted. If it was included, it would have allowed for changes in material prices and contractors would have been able to ask for some level of compensation.”
He added that it was not a viable venture for contractors to take it upon themselves to import cement because of the shelf life.
The Trade and Industry Ministry on Monday said when it became aware of impending cement price increases in November, Cabinet agreed to a revision of the quota and import licensing regime for cement for 2022.
The quota for imported cement would increase from 75,000 tonnes to 150,000 in 2022 and the Council for Trade and Economic Development also agreed, at the request of TT, to suspend the common external tariff and decrease the duty from 50 per cent to 20 per cent on other hydraulic cements for one year, starting January.
In February, Rock Hard Distributors Ltd, also increased prices because it was unable to maintain the cost of the imports and import duties.
It attempted to challenge the Government’s 75,000 tonnes quota and 50 per cent import duties but lost that judicial review. It has since closed operations in TT.
Rock Hard imports cement from Turkey and operates in several other Caribbean islands.
Ryan Ramhit, the managing director of Rock Hard’s local distributor Motilal Rahmit and Sons, on Tuesday said he was "lost for words" over what has played out but said the Government clearly identified their position on this matter.
“I really don’t have anything to say to be honest. I believe we were mistreated and victimised. We fought from day one and I believe that the Government made it clear on what they wanted.
“Basically, we are out of the market. The Government made it clear that they were in support of the local manufacturer. Of course, I would have my opinion and that could be biased.”
Ramhit said Rock Hard would re-enter the market once there was free and open trade.
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"Contractors: TCL cement price increase puts strain on construction sector"