Mérida, October 30th, 2011 (Venezuelanalysis.com) The Venezuelan government is to establish a new system for the distribution and sale of nationalised cement, and has also announced an increase in regulated cement prices.
Venezuelan president Hugo Chavez, who announced the measures on Thursday, stated that they are primarily aimed towards tackling price speculation on cement, which he saw as contributing to shortages in the building material.
“A new system for the distribution and sale of cement must be created so that the cement we are producing and selling at fair prices doesn’t fall into the networks of capitalist speculation, that buy it at twenty [bolivars] and sell it at forty or fifty,” he explained.
Government attempts to boost national cement production include introducing price controls in 2003, and nationalising the industry in 2008.
Distribution centres are to be established throughout the country, which will be supplied by the nationalised cement factories, grouped under the Socialist Cement Corporation. Cement will also be distributed directly to communities via hardware stores in order to facilitate access.
Chavez emphasised that the new distribution system should have the involvement of grassroots organisations, declaring “we [the government] must work directly with communes and popular power as it is the best way to end the misdirection [of cement] and corruption”.
Also, the regulated price of cement will be increased to between fifteen and twenty bolivars (US$3.5 – $4.7) per sack, the president announced. Cement prices have been frozen at 8.9 bolivars (US$2) since 2003.
Informal cement prices had been creeping above the regulated level, contributing to speculation and hoarding, and thus shortages.
Minister for Science, Technology and Intermediate Industries Ricardo Menendez, who proposed the price increase, argued the move would “guarantee national production” and “allow speculation networks to be broken”.
The president also said that the new price controls fall within the framework of Venezuela’s Law for the Protection and Defense of Economic Rights for People to Access Goods and Services, enacted in July this year, which empowers the government to set prices for key products and services in the Venezuelan economy.
He concluded that the new measures were “vital, as we must avoid capital gain and capitalist speculation”.
President of the Venezuelan Chambers of Construction, Juan Francisco Jiménez, commented that the increase was in line with rise in the market price of cement, but the move will likely cause a rise in construction costs, including for public projects
Developing a Public Construction Industry
In April this year the Venezuelan government launched a mass housing program, the Grand Housing Mission (GMV), with the aim of building two million homes in seven years to resolve the country’s housing shortage, estimated at affecting two to three million Venezuelans.
To achieve this goal, the government has been creating a national public construction system, of which boosting national cement production forms a key part.
However, cement production has shrunken in recent years, in part due to the electricity crisis in 2009 following an extended drought. The sector was also hit by the six-quarter recession in 2008-2009 as the Venezuelan economy was afected by the global economic crisis.
Nevertheless, opposition sectors have blamed the government for the fall in production, and prívate Venezuelan daily El Nacional suggested a correlation between this and the nationalisation of the cement industry.
The government has said private sector speculation and corruption is contributing to the problem, with private hardware chain EPA being sanctioned for the price speculation of construction materials in April.
However, national cement production increased by 1.7% in the first three months of this year. Of the 6.4 million tonnes produced so far this year, 2.1 millione are destined for the GMV, according to Menendez.
In August Chavez also announced the creation of a new National Public Works Company to coordinate and maintain construction equipment for public sector projects, especially the mass housing mission.