State steps in as cement prices zoom

With the construction sector reeling under rising cement prices, the state government has begun measures aimed at reducing the prices.

A Cabinet subcommittee comprising by minister K.T. Rama Rao will hold talks with cement companies in a day or two to ensure cement that the price dips below `300 per bag.

Builders have complained to the government, accusing cement companies of forming ‘syndicates’ and increasing prices indiscriminately over the last two months.

They threatened to halt all construction activity in the state if the government fails to contain the price rise.

However, this showed little impact on cement companies as the prices continue to increase.

At present, a bag of cement is being sold in a price band of `380 to `410 on on quality. In April, it was hovering at `350 to `380.

Meanwhile, the state government, which failed to contain cement price rise over the last month, was forced to act after it too started to feel the pinch.

K.T. Rama Rao, who successfully lobbied with cement companies earlier for supply of cement at `240 per bag earlier for the 2BHK project, has decided to hold talks with them again and convince them to sell the bags at `300 each.

The government is likely to cap the cement price at `300 per bag.

Contractors taking up construction of irrigation projects, Mission Bhagiratha, infrastructure projects and 2BHK housing have halted work citing higher cement prices. This has been resulting in projects getting delayed and deadlines going awry. TS and AP are the major cement producers in the country.

The total capacity of the cement companies in the two states is around 70 lakh tonnes per month. Since there is large-scale availability of limestone reserves in both these states, all major cement companies have set up plants here.

“Cement companies have formed syndicates to create artificial shortage in the state. They have deliberately reduced production by half since April. While there is a requirement of 20 lakh tonnes per month in the two states, cement companies are supplying 15 lakh tonnes and diverting nearly 20 lakh tonnes to other states. Governments of both the states allotted limestone reserves to cement firms for production and it is the responsibility of the government to ensure that required stocks are available in TS and AP at reasonable rates first,” said C. Shekar Reddy, builder and past national president, CREDAI.

Mr Reddy said they have already submitted a representation to the government in this regard as construct activity which has started recovering only recently after the demonetisation setback, has been badly hit.