Ministry of Commerce blamed for creating cement black market

Ministry of Commerce measures to resolve the supply crisis in the domestic cement industry appear to have backfired. By limiting cement sales to those in possession of building permits, the ministry has created a black market in cement, especially in Makkah and Jeddah.
According to a local newspaper, black marketers are presenting more than 10 permits daily to the ministry in Makkah. The permits allegedly belong to contractors who are licensed to buy one bag of cement for SR 14.5 and resell it for SR 18. There are reports, however, that a bag of cement can fetch as much as SR 23 when demand is high and lines are long to supply Makkah construction sites.
A representative of the Makkah branch of the Ministry of Commerce said that the ministry had taken steps to resolve the imbalance in supply and demand, contracting with a trucking company to use its 300 trucks to transport cement directly from the factory to the distribution centers. This would sidestep black market middlemen and break their monopoly on the product and prices.
Most observers, however, dismissed any ministry claims about solving the problem, saying that as long as demand exceeds supply, the current situation will perpetuate itself.
“The Ministry is incapable of providing a successful solution to the problem,” said Abdullah Al-Salem.
In Jeddah, the price of a bag of cement on the black market spiked to SR 25 recently in reaction to high demand. The ministry allowed 20,000 bags of cement to be distributed in Jeddah last week but has designated a new contractor who has guaranteed to deliver 30,000 bags daily for Jeddah only, correcting any shortage and rationale for high prices.
Enforcement efforts have also been stepped up, resulting in a number of black marketers forced to sell their bags at the mandated price of SR 14.5.
Bader Al-Asmary, another cement consumer, said: “The worst thing about this crisis is pursuing the places where cement is found, and the long queues for taking your quota, only to find, in the end, that your quota isn’t enough to finish the job.”
According to Al-Asmary, the blame for the crisis falls on the cement plants and the black marketers.