PRIME Minister Portia Simpson Miller, facing the biggest crisis of her fledgling administration, yesterday announced an extension of the waiver of 15 per cent tariff on cement imports, from three months to a year.

Her action was immediately taken as an apparent admission that the cement supply crisis had deepened.

Simpson Miller herself made the announcement, even as GraceKennedy boss Douglas Orane angrily questioned why Trinidad Cement Limited (TCL) had done nothing to ease the crisis in Jamaica.

Orane, in an uncharacteristically angry mood, indicated that the GraceKennedy subsidiary, Hardware and Lumber, a major player in the construction industry, was “in desperation” contemplating importing cement as the company reeled from the effects of the shortage.

He said over 100,000 workers in the construction industry had been unemployed or underemployed, in the wake of the cement shortage, which had driven down demand for other construction material.

At the same time yesterday, the umbrella Private Sector Organisation of Jamaica (PSOJ) said it was very concerned over the delay in addressing the critical shortage and bemoaned the consequent deterioration in the standard of living of idled construction workers.

“The situation has been allowed to remain unresolved for too long without a definitive intervention. The consequent decline in the construction sector for the first quarter of the year is cause for grave concern and has seriously affected the country’s economic growth,” said the business grouping.

Stung by criticisms over the handling of the crisis by her administration – mainly portfolio minister, Phillip Paulwell and information and development minister Colin Campbell – the prime minister yesterday stepped in with the new import regime.

“…This will clear the way for potential importers to plan import programmes over a longer period, thereby eliminating the challenges being faced by them in sourcing a stable supply to meet the shortfall in the local market,” the prime minister said.

She added that it represented a major concession by government, which could quickly bring about a satisfactory solution to the benefit of all partners in the construction sector.

The prime minister’s intervention comes a mere two days after Paulwell, the industry and commerce minister, told the country he was waiving for three months the 15 per cent Common External Tariff (CET) that the government hoped would open the gates to would-be cement importers.

Paulwell in his announcement had urged all suppliers to provide commitments within 30 days and to complete application for the tariff concession through the Trade Board, to ensure delivery within the three-month time frame.

But it quickly became clear that private importers would have difficulty sourcing cement supplies, due to a strong worldwide demand.

“It can now take up to six months to source and get cement into the island,” Jody Myrie of hardware distributors, Mainland International told the Observer. “Three months would have passed without anyone getting a substantial amount of cement into the island,” Myrie added.

Simpson Miller said that this was the final request from the importers and with all the hurdles now cleared it is now hoped that they would perform.

She added that despite the global shortage of cement, she expected that the planned imports by the private sector, as well as supplies negotiated by the government, would bring about a solution to the crisis in the shortest possible time.

However, moments before the government’s announcement, Orane, the GraceKennedy chairman and CEO, suggested that Trinidad Cement, owners of the three regional cement plants – including the Kingston-based Caribbean Cement Company – could have done better.

Orane who spoke to the Observer, after he had made a brief statement to newsmen he had called together yesterday for an informal meeting with his top brass at the Knutsford Court Hotel in Kingston, said that if the Caribbean Single Market, which came into effect January 1 this year, had been working efficiently, supplies of cement would have moved to the area of demand, in this case Jamaica.

He said Trinidad and Barbados where the other two plants were located, did not have the “dire situation” faced by Jamaica, and he asked what would have happened if the three plants were not owned by the same company?

“Would they have reacted any differently. I think the answer is obvious.”

Orane said TCL should have moved cement supplies proportionately away from Trinidad and Barbados to Jamaica to ameliorate the situation.

“The serious question is why did this not happen, in the context of a single market where goods are supposed to flow freely?” he asked.

The GraceKennedy CEO told the Observer his company had shown commitment to the single market and integration, not only in words but by being the only regional business that had listed on all four stock exchanges in the Caribbean.

The cement crisis emerged in February when the largely monopoly Caribbean Cement Company had to recall a batch of 500 tonnes of faulty cement and then halt deliveries for several days, idling the construction sector.

Several major construction projects were severely affected, including hotels, Highway 2000, the Half-Way-Tree transport centre and stadiums being prepared, in Kingston and Trelawny for the 2007 Cricket World Cup.

The company eventually admitted that a breakdown in quality control systems at the Rockfort plant was responsible for the delivery of the 500 tonnes of sub-standard cement.

Delivery at the company’s Rockfort plant became uncertain as production fell below its 3,000 tonnes per day capacity while a demand of 4,000 tonnes daily was cited by the construction industry.

Reacting, the government in March reduced the tariff on cement from the existing 40 per cent to 15 per cent to encourage independent importers to take up the shortfall.

One hotel, the Pinero Group, which is constructing the US$200-million Bahia Principe Clubs and Resort at Pear Tree Bottom in St Ann, imported 8,000 tonnes for their projects.

But the private companies were unable to fill the huge gap, and as the situation worsened, the government was spurred into action.

According to Paulwell in an explanatory statement published in the Observer yesterday, of the 45,726 tonnes of cement imported since March 6, Caribbean Cement accounts for 80 per cent of the amount.

“Now that the time is extended it makes more sense,” Tankweld’s Bruce Bicknell said, arguing that ever since the duties were reduced his company had been looking for cement.

“We’ve been able to find only 15,000 tonnes,” he said, adding that his company had been affected by a 50 per cent drop in the sales of reinforcing steel, one of their core products.

Mainland, the largest importer of cement outside of Carib Cement, was also upbeat.

“It’s excellent for us, we can now import Portland Type I at a price comparable to Carib Cement,” Mainland’s Myrie told the Observer.

The 40 per cent anti-dumping tariff that was imposed on the importation of cement in 2004 was intended to protect Carib Cement from companies like Mainland.

Meanwhile, the PSOJ has encouraged the government to support a proposed investment in a new cement manufacturing plant, saying it had become apparent that the current productive capacity of the Cement Company was inadequate to meet the needs of the construction sector.

“The PSOJ applauds the recently announced initiative to import cement. However, we are aware that there is an international shortage of cement which means that the planned importation will require close monitoring to ensure that shipments are realised,” it said.

– With additional reporting by Desmond Allen