CET waiver on cement extended, TCL cries foul

Minister of Tourism, Industry and Commerce, Manniram Prashad, on Thursday confirmed that government had extended Common External Tariff (CET) waiver on extra-regional cement imports while Trinidad Cement Limited (TCL) contends that this contravenes the revised Treaty of Chaguaramas.

Cement importer and Managing Director of R&R International Ltd, Jacob Rambarran, said he expects that the CET would be extended for at least one year, but regional cement supplier TCL said it is disappointed about the continuation of the 15% CET waiver.

Since 2004 government has consistently waived the CET on extra-regional cement imports, after a shortage developed in the market that year. But TCL has maintained that there is no need for the waiver to be in place because it has a capacity of 30,000 tonnes per month when the market demands 12,000 tonnes per month.

Rambarran is asking for a year because “it takes a while to get cement.” Later, comments made by Head of the Presidential Secretariat Dr Roger Luncheon attested to this. Rambarran also said TCL’s claim that they can supply the market is groundless, adding that “government acted correctly” since without the waiver he believes Guyanese would be “paying through their nose” for cement.

If the government had not granted the CET waiver, he argued, it would amount to granting TCL a monopoly as they own all the cement plants in the region and Rambarran said he would not be able to buy from them. “It is a false claim that they can supply (cement),” he reiterated, citing recent increases by the company in regional markets for cement. He again said that it is the extra-regional imports that are keeping prices low in Guyana.

The R&R director said a monopoly will charge as much as the public can pay but with the extended waiver the public will gain. Rambarran said usually the government will send a letter indicating the extension of the waiver, but this has not been sent and he only learnt of the waiver on Thursday.

Monitoring

Meanwhile, the commerce minister confirmed to Stabroek News, at the launching of Tourism Awareness Month, that the government had extended the waiver. However, Prashad said he could not comment on how long it would be put in place. He also declined to comment on the timeframe given for the waiver or the expiry date and would only say that the ministry was monitoring the situation closely. The minister said Guyanese must be able to build homes at affordable prices and before taking the decision to extend the waiver, discussions were held with all stakeholders including TCL.

Additionally, Dr Luncheon, at a post-Cabinet press briefing on Thursday, said government is not certain that the business environment is poised to address Guyana’s needs urgently, accurately and competently, with regard to building blocks. Luncheon referred to retailers, wholesalers and importers adding that “We don’t have the information that provides us with the confidence.” As regard the likely timeframe of the extension, Luncheon said now that the waiver has been extended, importers must be given time to procure the cement, that is, to work out financial arrangements, and the waiver must take this into account, specifically in relation to letters of credit. In the light of this, Luncheon said he was “not certain what the period would be.”

The TCL Group, in a press release yesterday, expressed “deep disappointment at the indication that the government of Guyana intends to maintain the waiver of the 15% CET on cement imports.” It noted that earlier this month TCL Group executives along with the Plant Manager of its subsidiary TCL Guyana Inc (TGI) Mark Bender, met with Prashad and pointed out that solely on the local bagging facility capacity of 30,000 tonnes per month the market can be supplied.

The Group also referred to the revised Treaty that requires a capacity to supply the market and nothing else to support the institution of the CET. The company said it was taking the position adopted by Guyana with Jamaica on rice, where the local rice was being pushed out of the Jamaican market with the influx of cheap US rice. Agriculture minister Robert Persaud later visited Jamaica and argued for the more expensive local rice to be allowed equal access to the Jamaican market and this was allowed.

According to Bender, “We expected that since the government of Guyana argued on that notion, it would have been easy for the theory to be equally applied to cement imports into Guyana as required by the revised treaty.” He added that “The TCL Group has demonstrated this vigorously, clearly and consistently over the last 10 months since the start-up of the TCL Guyana Inc.”

Meanwhile, Prime Minister Samuel Hinds said the Group had the opportunity to visit and gain insight into Arawak, their cement production facility in Barbados, which supplies most of the bulk cement for the TGI facility.

According to the release the commerce minister first raised the price issue during a visit to TGI. He had said he was hopeful that the operation of the local plant was expected to stabilize cement prices. TCL cement retails for over $1,800 a sack, value-added tax (VAT) inclusive in outlying areas and in the city at $1,600 plus VAT, while imported brands are retailed for as low as $1,300 VAT inclusive.

The company maintains that the price issue is unrelated to the CET rules. “The government of Guyana and the public were reminded through the publication of empirical data in the press, that when TCL cement dominated the market, cement prices were stable and that it was only after the removal of the 15% CET that prices for the product sky-rocketed.” It was further contended that, “since the TGI Plant has been in operation, prices have started to come down again.”

Bender also said that he firmly believes that the revised rules of the Treaty were met as it relates to TCL and “there is no basis for the government of Guyana to extend the waiver.” The release also said that there is regional significance because the territories that manufacture cement have a right to access the Guyana market under the conditions of the CET as is the case for products made in Guyana and exported to other Caricom countries.

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