Study shows FDI-based cement industry in Nepal more efficient and profitable than local industries

KATHMANDU: A study carried by Nepal Rastra Bank (NRB) has shown that foreign direct investment-based cement industries in Nepal are found to be be more efficient and profitable than both government-owned and locally-owned cement industries in Nepal.

The report entitled ‘Foreign Direct Investment in Cement Industry in Nepal’ states that FDI-based cement industry, on an average, uses 0.99 metric tons of limestone to produce one ton of cement while the the government-owned cement industry uses 1.45 metric tons.

Similarly, production cost to the sales ratio of the FDI-based cement industry is about 46.63 percent compared to 48.95 percent and 82.18 percent of locally owned and government owned cement industry, reads the study report.

Since the demand for cement is projected to be doubled in the next three years, study shows that there is still room for more cement industries to be set up in Nepal. The per capita consumption of cement is low in Nepal (303 kg) compared to other countries like China (1716 kg), South Korea (1102 kg) and Bhutan (734 kg).

As Nepal is in the process of developing infrastructure, the demand for cement is likely to go up. Several mega projects and national pride projects such as Gautam Buddha Regional International Airport, Budhigandaki Hydropower Project, Pokhara Regional International Airport, and so on are under construction. Similarly, Upper Marshyangdi Hydropower–2, Kaligandaki Gorge Hydropower Project, and Ankhu Khola Hydropower Project are already in the pipeline.

As per the report, the annual installed capacity of 55 cement industries stands at 15 million tons in 2018/19 while
the domestic demand is 9.05 million tons. Domestic cement industries produced 7.49 million tons while 1.56 million tons of cement was imported in 2018/19.

Though the import of both cement and clinker declined in 2018/19, significant quantity has still been importing primarily because of issues like certification, quality inconsistency and bulk supply ability issues related to domestic cement industries

Fiscal Nepal |
Friday May 21, 2021, 03:07:09 PM |

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