Thursday, March 27, 2008

Cement, Cement, my kingdom for a bag of cement

Another report today of those pesky 'Asians' being busted selling so-called black market cement at 2.9 rials per bag. See Oman Tribune article
2 held for cement price manipulation
By A Staff Reporter
MUSCAT Two Asians were caught red-handed while selling cement at exorbitant price in the Wilayat of Ibri on Tuesday. The two expatriates were selling cement at the rate of RO2.900 per bag. The arrest was made as part of a campaign run by the Ministry of Commerce and Industry against people manipulating prices. ROP directly headed to the place after being notified and caught the two Asian expatriates red-handed.

The arrested men admitted their crime and were referred to the Prosecutor-General in order to start the legal proceedings against them. With this, the number of the arrested people in the Wilayat of Ibri reached four.

One of my construction industry buddies says the problem should ease in a few weeks now that people have been allowed to import cement from China directly. He says the price of Chinese cement, landed in Muscat, is only 500 baisa per bag. Its lower quality, so it will mean the recipe will have to be changed, but thats still almost a third of the official Ministry price.

Apart from the fundamental shortage of cement as Omani production has lagged demand, there are two big reasons for the black market. Firstly, some projects are getting priority for the cement that’s available. Secondly, many contractors have penalty clauses in their contracts – if they don’t finish on time, they pay. So if you have everything you need except cement, its well worth paying extra if it helps you avoid a big penalty!

I still wonder who in the Ministry of Commerce and Industry is supposed to be responsible for forestalling these things in advance. It can’t be THAT hard to estimate the demand for cement, based on the big approved projects, and to compare forward estimates with domestic production and anticipated demand from houses.

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