State cement units may be revived to give a boost to roads, realty projects
The government plans to revive state-run cement factories across the country, a move that could substantially bring down road and housing construction costs besides giving a push to the stressed infrastructure sector.
Road transport and highways minister Nitin Gadkari said the aim is to bring down the cost of cement to make the projects financially more viable.
"We are working on a plan to revive state-run shut cement factories," he said, adding that his ministry has sought details from the heavy industry ministry on loss making or shut cement plants.
Gadkari has already held meetings with heavy industries minister Anant Geete and officials of Cement Corporation of India to work out a detailed plan.
State-owned Cement Corporation of India, which comes under the heavy industry ministry, has six non-operating cement plants.
The company achieved cement production of over 9 lakh tonne in 2014-15 and its overall capacity utilisation stood at 66%, highest in last five years. "We have the mines contract, so we are capable to hike production given that due government support is given to upgrade the operational efficiency," said an executive with the firm.
A memorandum of understanding (MoU) between the road transport and highway ministry and Cement Corporation of India will be signed soon for assured take off of cement.
Another senior government official said the government plans to revive state-run units to counter private cement firms over fear of cartelization in the sector. "Cement demand is pegged to be around one crore tonne in the next five years and there already exists a cartel like situation in the cement industry that will possibly increase the cost of cement prices."
At present, a bag of cement costs around Rs 200 if booked through the cement portal of the roads ministry where 39 suppliers have already registered themselves. This compares with the open market rate of Rs 340 per bag.
"We want this price to come around Rs 120 per bag," the official said, adding that they have also warned the private cement manufactures that the government will import cement from China if they do not bring down their prices.
Earlier, Confederation of Real Estate Developers' Associations of India had complained to the Competition Commission of India about high cement prices, accusing some cement makers of cartelisation.
Source: Economic Times