Cement prices set to rise

Retail prices for cement are likely to soar after industry leader, Bamburi Cement, announced a price increase. The move, which took effect on Monday, is yet another blow to the building industry, which is still reeling under cost inflation triggered by a global construction boom and rising oil prices. Industry players yesterday blamed the increment on the rising cost of electricity, gas, diesel and coal. Bamburi Cement spends about 47 per cent of its running costs on fuel, including the furnace oil that drives their heavy machinery.

An industry source said the retail price of cement could go up by either seven or eight per cent. Bamburi group marketing manager Dennis Kashero put the increase at six per cent. Fuel prices have been rising in the wake of instability in Iraq, and corporate turmoil in Russia, caused by the declining fortunes of its major oil producer, Yukos.

Cement firms have, in the recent past, also had to shoulder rising electricity costs. Apart from fuel adjustment, the forex component in electricity bills has been surging, because the shilling has been weakening against the dollar. East African Portland Cement, which controls 40 per cent of the domestic cement production, said it too would soon increase the price of its cement.

"We are negotiating with the relevant government agencies, with a view to adjusting our prices. But we intend to be sensitive in making the changes," the firm’s managing director, Mr Zakayo ole Mapelu, said in a telephone interview. Production costs had gone up by between 10 and 15 per cent and this could wipe out the manufacturer’s profit, he said. This is the second time cement prices have gone up in less than a year.