Andhra to get cement at discounted price

Cement manufacturers agree to supply 48 tonne of cement to the state's housing programme this fiscal.

Cement manufacturers on Tuesday agreed to supply 48 lakh tonnes of cement at discounted prices to the Andhra Pradesh government for its pet-weaker section housing programme during the current financial year.

The manufacturers also agreed for a marginal increase of Rs 10 per bag over last year's offer.

Talking to media after a high-level meeting held by the chief minister with the representatives of cement companies, K Jana Reddy, minister for home and housing, said the allottees under the housing programme would save Rs 384 crore on account of the price discount bargained with the cement manufacturers.

The manufacturers have agreed to supply 4 lakh tonne of cement every month at the agreed prices during the entire financial year, starting this month.

The effective prices after the Rs 10 per bag hike would be Rs 145 in most parts of the state, Rs 155 and Rs 160 on supplies in 3-4 districts which are far end from the cement plants.

Last year, the cement companies agreed to supply 27 lakh tonne of cement at the rate of 3 lakh tonne a month from June 2006.

While the companies still have a back log of 2.87 lakh tonnes under the last year's commitment, the increase of 4 lakh tonne supplies to the housing programme is expected to put open market supplies under further strain in the coming months.

As per the official figures, cement despatches from Andhra were about 26.37 million tonne during the year 2006-07, with the average availability of 21-22 lakh tonne supply per month.

The consumption from the housing sector during the same period was around 1.5 lakh tonne a month on an average.

This, the additional demand of 2 lakh tonne coming from the housing programme is expected to create shorter supply in the open market, resulting in further increase of cement prices at dealer point, according to industry sources.

The consumption from the government housing programme, which aims to build 32 lakh houses this year, has gone up to 2.3 lakh tonne in March and 1.9 lakh tonne during the first 20 days of the current month.

Interestingly, the state government's earlier stand for a cut in the open market prices has not figured in today's meeting.