Makkah construction projects affected by cement crisis

Makkah construction projects affected by cement crisis
Updated 08 July 2012

Makkah construction projects affected by cement crisis

Makkah construction projects affected by cement crisis

An acute shortage of cement is delaying most commercial and residential projects in Makkah, according to sources in the contracting sector. Amid an unprecedented construction boom featuring the implementation of several multibillion riyal projects in the central Haram area and other areas in Makkah, the worsening cement crisis is likely to affect nearly 70 percent of the projects, they said.
The cement price per bag has shot up to around SR20 within two months after the government’s intervention to fix the price at SR14, Al-Eqtisadiah business daily reported yesterday.
A number of officials in the contracting sector said the current crisis has been artificially engineered. They blamed cement dealers for worsening the crisis by creating fears about the scarcity of the product. Abdullah Saeedi, chairman of the contractors’ committee at Makkah Chamber of Commerce and Industry, said the contractors are used to becoming victims of such unscrupulous practices.
“We are still struggling to come out of the fallout of the crisis that affected us a few months ago. Now we are facing another crisis created by some people and for which there is no justification whatsoever,” he said, adding contractors are in a predicament due to their failure to fulfill commitments to owners and developers of several construction projects.
Saeedi expected nearly 70 percent of construction projects might be hampered by the worsening cement shortfall. A bag of cement now costs over SR20 and it may shoot up further in the coming days unless concerned authorities urgently intervene. A cement crisis resulting from illegal trading and a steep hike in prices had triggered an intervention from authorities two months ago. As a result of the cement shortages, contractors and realtors in Jeddah, Makkah, Madinah and other cities in the western region had to pay SR25 per bag in the black market. It also raised the price of ready-mix cement from SR200 to SR350 per sq. meter.
Subsequently, Commerce and Industry Minister Tawfiq Al-Rabiah had issued an order on March 18 fixing cement prices at SR12 per bag for factories and SR14 for street vendors and shops while the price of loose cement was SR240 per ton. He said that the ministry, together with the Ministry of Petroleum and Mineral Resources, has taken steps to increase cement supplies by providing adequate fuel to factories to operate at full capacity. He also urged the public to inform the ministry of any discrepancy in prices by contacting the toll-free No. 8001241616.
Saeedi urged the ministry to urgently intervene to solve the new crisis, of which contractors, owners and developers of construction projects are major victims, as well as to take stringent penal action against violators of its directive.

Referring to the current hike in prices of cement, Ahmad Zagzoug, deputy chairman of the committee, said the reason attributed to the hike cement prices was false.
“Frankly speaking, there is not any actual shortage of cement that prompted distributors to increase prices. They justify their unscrupulous act by drawing attention to the losses incurred to them due to the long queue of trucks in front of cement factories to take their consignment,” he said adding foreign workers who dominate the distribution market are also exploiting the situation to increase prices.
According to Zagzoug, the cement crisis has dealt a severe blow to the massive construction boom in the holy city. He sought the urgent intervention of concerned authorities, especially the Ministry of Commerce, to contain this situation and make available an adequate quantity of cement at the ministry’s fixed prices.