Ethiopian government seems to be targeting cement distributors who are said to have contributed to the cement market crisis in the country
The Ethiopian government on Thursday announced that it will determine cement selling prices in the market until demand and supply balances.
The demand and supply gap has been widening and the government has decided that it will be determining prices effective December 22, 2022.
The regulation will be applied mostly to distributors, not producers.
Factories are to notify the government about product prices that include transportation costs when they supply to distributors. If the distributors are found to be selling over the price that the government introduces, the suppliers will discontinue deals with distributors and inform the government about price goughing.
Government is also to monitor distributors to ensure that the transaction is completed in a legitimate way with receipts.
From the state media report, the shortage on the supply side is linked to inadequate production. Factories that produce properly are not more than three, as reported by state media.
In an earlier regulation, the Ministry of Trade and regional integration introduced guidelines for cement distribution across the country to be only by distributors approved by regional governments and city administrations ( Addis Ababa and Dire Dawa).
In the 2013 Ethiopian fiscal year (2020/21) the total cement production in the country became 6.1 million quintals but it dropped to 4.1 million quintals in the 2014 fiscal year (2021/22).
Teshale Belhu, State Minister in the Ministry of Trade and Regional Integration, is cited as saying that regulation 908/4014 has been phased out and new regulation is in place.
Mega government projects and bid developers are said to get priority for cement consumption.
Earlier this week, State media released a report unveiling a clandestine cement distribution network with price gouging in the capital Addis Ababa and its outskirts. It is not sold in distributors’ stores.
Consumers usually get out-of-stock replies when they visit stores to buy cement but it is sold in the black market at a very high price.
The price of one quintal of cement is not more than 700 Ethiopian birr but it is sold in the black-market at a price of over 2000 Ethiopian birr.
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