Cement manufacturers seek subsidy in electricity tariff

Kathmandu, Dec. 21

Stressing that the country would be self-reliant by the end of 2020, Cement manufacturers have urged the government to subsidise the electricity charges and set standards of the product at the earliest.

They want the Nepal Electricity Authority (NEA) to supply electricity to the cement industries at the rates similar to the charges imposed while exporting energy to India.

Similarly, setting standards for 33, 43 and 53 grade cement is also in the demand which is required to penetrate in the Indian market.

“We are paying Rs. 13-14 per unit electricity charges currently and it needs 100 unit energy to produce 1 metric tons of cement which has increased the production cost,” said Pashupati Murarka, promoter of Arghakhanchi Cement who is also the immediate past President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI).

He said that the NEA should charge cement producers with the rate at which energy is exported to India in future. “I think there wouldn’t be any problem if the electricity authority supplies the exporting energy to the domestic industries. It will contribute to employment generation and economic growth,” said Murarka.

However, cement manufacturers’ demand is not likely to be met soon as the NEA has just energy banking with India and it will take more than a couple of years for energy trade between the two countries.

“We hope that another 1000 MW would be added to the national grid by next year. But even then energy will not be surplus in dry season,” said Prabal Adhikari, NEA Spokesperson. “Reducing electricity charges is a good thing and we favour it but first we have to bring down the electricity tariff.”

Meanwhile, the responsibility to set electricity tariff is given to the Electricity Regulatory Commission. Adhikari said that government energy subsidy to cement exporting industries can be an alternative.

Cement Manufacturers Association (CMA) has projected that the country would be self-reliant in cement by next year. Meanwhile, entry of large players like Hongshi Shivam has caused price adjustment of cement recently.

Another glitches in cement export is the standard measures. Indian market seeks Grade 53 cement but so far Nepali cement don’t have any standards even though the producers have long been demanding that.

However, some cement producers themselves do not want the grades which is creating challenges, said a producer.

Murarka said that although they had urged the Nepal Bureau of Standards and Metrology multiple times to create standards for cement, it has not made any homework in this regard.

“Our standard is better than the Grade 53 cement but there are no provisions to substantiate the claim,” he said.

Published in The Rising Nepal daily on 22 December 2019.