Cement shortage stokes black market

A BLACK market in cement is flourishing in Qatar due to severe shortages. While the government has imposed a three-year freeze on the price of cement, currently fixed at QR250 per tonne (or QR12.5 per bag of 50kg), it is going in the market for as much as QR60 – if available at all.

The price of QR12.5 per bag sums up to anything from QR14-QR19 when the cost of transportation is added.

Some of the building-material suppliers have either quit dealing in cement altogether while others deny any availability.

“Yesterday I was told by a shop in Najma there was no cement. I kept insisting and the guy made some calls and then offered me 15 bags at the rate of QR45 – five times higher than the government’s rate,” said a small-scale contractor.

Another contractor explained how he had been buying cement bags from brick-manufacturers at jacked-up prices.

“Because my project has been getting delayed for the past few months, I recently bought 200 bags at QR48 per bag and another 100 two weeks later at QR52,” he said.

Desperate to secure cement for their ongoing projects, companies are trying anything and everything, including bribing the driver of the trailer that transports cement from factories to sites, it is learnt.

Hoarding is another problem.

According to the US Geological Survey’s Minerals Yearbook (2006), Qatar produces about 1.5mn metric tons of hydraulic cement every year. The report included data available through August 31, 2007.

Currently, cement can be purchased from government-owned Qatar National Cement Company (QNCC) in Umm Bab or Al Jabor Cement which is in Mesaieed (priced at QR17 per 50kg bag).

A third producer, Gulf Cement Company, is scheduled to go on stream in the first quarter of 2009.

Supply from Saudi Arabia halted a month ago, apparently due to increased domestic demand.

Officials of bigger construction firms are getting worried about projects being badly affected, if the situation worsens.

“Our daily consumption is around 2,000 bags but we can get only 1,000 bags through QNCC,” said Al Khiyarin Group managing director Idrees Anwar.

“Other than the procurement of cement, the availability of sand is also being affected,” pointed out Anwar.

Others highlighted delays, higher penalties and rise in overhead costs and lesser profits as the fallout of the shortage.

Senior QNCC officials last week admitted that the current situation in the local market was not expected to be resolved soon “as the unprecedented demand for the material requires huge investments before bridging the gap between supply and demand.”

The company is importing some 5,000 tonnes of cement daily to meet the soaring demand.