The government’s decision to reduce customs tariffs on cement from 25 to 10 per cent should encourage importers to increase purchases of this commodity, market experts told The Jordan Times. Jordan Construction Contractors Association (JCCA) sought complete abolishment of customs on imported cement in order to lower prices which shot up to JD90 a tonne from JD62 two weeks ago. The government also eased the procedures taken by the Jordan Institute of Standards and Metrology (JISM) for testing the imported quantities in response to demands by the association.
According to JISM Assistant Director General Salem Quhaiwi, the old procedures involved testing samples of imported cement at the labs of the Royal Scientific Society for a period of 28 days. This process, he remarked, places additional financial burdens on the importers, and risked the storage at the customs yards. The new mechanism is based on an agreement between the exporter and the importer on the details regarding the kinds, quantities and delivery date of the commodity.
"Upon a written notification from the importer, JISM would form a technical committee of three persons to conduct needed tests in the country of origin," Quhaiwi explained noting that the importer would pay the related costs. "A permission would be issued after the committee retests the samples here after 28 days and ensures that specification requirements are met," he added.
JCCA President Yousef Qurneh accused the Jordan Cement Factories Company (JCFC) of applying double standards in the pricing policy as he compared between the US$58 per tonne price in Egypt and the US$105 per tonne in Jordan. Pointing to JCFC’s production of 18,000 tonnes a day when the average local demand is 27,000-30,000 tonnes daily, Qurneh said the shortage in supply causes delay for contractors to complete projects.
JCFC Public Relations Director Hana Ateeqa told The Jordan Times that the sharp rise in the price of fuel oil, which is the main element in the production process, caused the prices of local cement to increase. JCFC differs with the government on the use of natural gas instead of fuel oil in order to reduce production costs. She attributed the low prices of cement in Egypt to factories there using natural gas instead of fuel oil.
Ateeqa also emphasised that the 16,000-18,000t of daily output usually meets the local demand. "However, when local demand is high as it is now, the JCFC shifts quantities assigned for exports to the local market and increases production capacity to 21,000 tonnes," she said describing the current increase in demand as unjustified, She claimed that cement traders want to store additional quantities to benefit from the expected higher prices based on "inaccurate and unreal predictions."
The JCCA president criticised the stoppages and shutdowns saying that the machines have not been modernised since 1951 when the cement factories were built. "Even when operating properly, the JCFC’s priority is to meet the export obligations before the local demands," Qurneh charged. Expressing dissatisfaction over the government decision, he called for total elimination of customs tariffs on this very important commodity, and urged licensing a new cement factory in the country to meet the increasing demand. According to Qurneh, some official sources told him that another cement factory has been licensed and would start production in 2008.