The proposed entry of foreign cement manufacturers into the Nepalese market has set off an expansion drive amongst domestic producers.
Dangote Cement of Nigeria, Reliance Cement of India and Hongshi and Huaxin of China have all been given necessary approvals to begin operations in Nepal. The combined FDI for these companies amounts to US$1.45bn and the total proposed output stands at 22,000tpd. This increase in capacity by foreign companies has created unrest among domestic manufacturers.
In a move to compete with this encroaching foreign capacity, domestic producer Arghakhanchi Cement announced that it would be tripling its capacity to 3000tpd wishing the next 1.5 years. Currently, the company’s factory has a capacity of 1200tpd. Similarly, Agni Cement Industry, which has a current capacity of 300tpd, has announced plans to set up a new plant with a capacity of 1200tpd.
Tara Prasad Pokharel, general secretary of Cement Manufacturers’ Association of Nepal (CMAN) said, "We don’t see any space for foreign investors in the domestic market. They can survive here only if they displace domestic factories." According to CMAN, annual domestic demand stand at about 5.5Mt and domestic production amounts to 4.6Mt.