Cement factories in the Parsa-Bara Industrial Corridor are heading towards a crisis for lack of adequate demand at a time when construction activities normally intensify.
Development activities have slowed in the absence of a budget, and construction of housing projects has slackened following Nepal Rastra Bank’s curb on real estate lending. The central bank has recently lifted restrictions on lending to housing projects through the new monetary policy, but loans for buying land are still barred.
Entrepreneurs said they had been forced to sell cement at a discount of 30 per cent amid the slump in demand.
Rajesh Kyal, manager of Star Cement, said that demand for cement fell with a decline in building projects following the central bank’s policy to restrict credit to the realty sector. Even big investors are hesitating to invest in this sector due to political instability in the country. "The cement industry could suffer a total collapse if the situation continues for a long time," he added.
An increase in the supply of cement due to new factories coming online and smuggling from India are other factors that have led to a decrease in the price of cement, said Ashok Baidhya, manager of Nepal Shalimar Cement. The cost of production, however, has risen because of load-shedding and multiple taxes being imposed on the highways by different authorities.
The country has become self-sufficient in cement as many entrepreneurs have invested millions of rupees in its production. Baidhya said that the government should promote the use of domestic cement in development projects to protect the industry.
There are eight cement factories operating in the Parsa-Bara Industrial Corridor. They are Star, Nepal Shalimar, Viswakarma, Shree, Krishna, Ambe, Jagadamba and Tri Shakti which import raw materials from India.