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Economy & Politics

Cement, steel manufacturers cut retail prices

Mr Narendra Raval, the chairman of Devki Group which owns National Cement and Devki Steel Mills. PHOTO | FILE
Mr Narendra Raval, the chairman of Devki Group which owns National Cement and Devki Steel Mills. PHOTO | FILE 

Steel and cement manufacturers have joined food processors and long distance buses in cutting prices as pressure mounts on other producers to transfer benefit of dropping energy prices to consumers.

National Cement has cut the ex-factory price of its Simba brand by Sh25 to Sh575 per 50kg bag – retail prices vary depending on the location due transport cost component.

Steel, critical for supporting structures, is priced 11.2 per cent lower at Sh64,865 ($710) per tonne.

“Lower energy bills have given us room to reduce the prices since October,” said Narendra Raval, the chairman of Devki Group, the parent company of National Cement, which manufactures the Simba brand.

Other subsidiaries in the group include Devki Steel Mills and Maisha Mabati Mills. The new ex-factory cement prices are the lowest since they averaged Sh645 a bag last January from a peak of Sh740 in 2009.

Steel prices have also shaved 30.3 per cent compared to last year when they stood at $1,020 a tonne.

Mr Raval said the company had experienced “some” reduction in its power bills previously standing at Sh65 million per month before costs started falling since last August on lower fuel prices and injection of additional geothermal energy to the grid.

Most cement firms in the country rely on electricity to fire their plants, but several have indicated plans for a switchover to coal-fired plants citing high power bills.

Electricity tariff for industrial consumers has dropped by about 30 per cent in the six-month period, according to the energy regulator.

Fuel surcharge, eased by the injection of 280 megawatts of geothermal power to the grid between August and December, has dropped from Sh7.22 per kilowatt hour (kWh) in July to Sh2.51 this month.

The lower prices of the building materials bode well for property developers and the government which is undertaking or planning to build key infrastructure development projects including a 10,000km road network and Lamu Port and South Sudan Ethiopia Transport (Lapsset) Corridor.

Official data shows cement consumption rose 6.9 per cent to 4.2 million tonnes in 2013, driven by increased construction projects.

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