Increase in gas price impacts cement cost in Bangladesh

Bangladesh's government has increased gas prices for the industrial sector including the cement industry, effective from 1 July 2019. The new price hike came in response to the demands of different gas utility companies.

The Bangladesh Energy Regulatory Commission (BERC) declared an average price hike of 32.8 per cent for all users. The increase in gas prices, coupled with some tax measures in the budget 2019-20, have started to impact the manufacturing costs of cement in Bangladesh, says a cement industry representative body.
 
Reportedly, the retail price of each 50kg bag of cement has edged up 12 per cent, or BDT50 (US$0.59), to BDT460-470, following these measures.
 
According to local media, cement manufacturers attributed the price hike to the recent rise in gas price for industries, captive power generation and tax measures imposed on the import of raw materials. According to the new tax measure, cement makers have to pay five per cent advance income tax (AIT) to import raw materials and there is no scope to adjust the tax at the end of the year.

In addition, there is another five per cent advance tax (basically VAT), which cement makers will have to pay while importing raw materials and other required ingredients.
 
The new tax measures and gas price hike have caused a cement price rise of BDT53 for a 50kg bag, according to Mohammed Alamgir Kabir, president of Bangladesh Cement Manufacturers Association (BCMA), who told media that some brands adjusted the price on 1 July, the first day of the fiscal year as manufacturers had no other alternative, or else they would have incurred heavy losses.