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Yemen: International Bids for Cement Bag Factory

SANA'A - The General Corporation of Cement Marketing and Industry is to invite bids to establish Yemen's first factory to manufacturing cement bags. Mohammed Shanif, the deputy chairman of the cement corporation told Saba news that the corporation would study seriously projects to start a factory. The international bid will be open to all national, Arab and foreign investors

"The project will meet all needs of the cement factories of the corporation in terms of bags," Shanif said. Shanif said that the factory will be first of its kind in Yemen, and would save more than US$6 million spent every year by the corporation on buying cement bags. Demand for cement is booming in Yemen, and the bag factory would produce between 30 to 70 million bags annually, he said. The developments come after Yemen suffered a cement shortage earlier this year, with demand rising and prices increasing dramatically due to rapid growth in the building industry, particularly in the major cities. The cement shortage peaked at the beginning of this year, when the price of a 50kg bag rose to YR1, 200 on the black market. Government-run cement corporations raised the official price from YR700 to YR750.

The corporation operates three cement factories - Amran, Bajal and al-Barh. According to corporation statistics, the production capabilities of the three factories reached 1,400,000 tons at the beginning of the current year, which cover only 45% of the need of the local markets. The remaining 55 % needed has to be imported. However, domestic production capabilities will increase to up to 1.5 million tons by 2006 according to other studies, once a new extension project at the Amran cement factory is complete.

The invitations for bids to set up a cement bag factory will be announced in the coming year as part of the strategy for the development of the cement industry to cover local demand, Shanif said. Demand has increased in the past five years, he added. He said the bid would ensure that the factory should be designed in accordance with latest modern standards and produce high quality goods. The corporation is to finalize measures of developing productions in its three factories. "Next year, the new production line of Amran factory will be opened and increase capability of the factory by up to 1.7 million tons annually. The current capability is from 550,000 to 700,000 tons annually," he said. The cost of the new extension project in Amran factory was US$140 million, while a similar extension at the Bajal factory will cost US$90 million. Once the extension of the production line is complete, Bajal will increase production by 800,000 tons annually, taking current production to up to 1.2 million tons by 2007.

Since its establishment in 1973, Yemen's cement industry has received considerable support from the state Yemen's government has always obtained the necessary loans to finance this public sector industry, which currently consists of three main factories.

Shortages earlier this year were widely blamed on an increase in demand for cement from the black market. Official sources say that the price rise could have been caused by the demand brought about by construction projects to celebrate the 15th anniversary of Unification Day. Other official sources however blame it on traders exploiting the opportunity and raising prices to sell on the black market.

By Observer staff

© Yemen Observer 2005