Iraq cement manufacturers warn of 'enormous losses' over fuel subsidy cut

Iraq's association of cement manufacturers on Tuesday slammed a government decision to reduce subsidises on fuel for the sector, warning the move risks factory closures and cement price increases.

The oil ministry earlier this month raised the price of fuel sold to cement manufactures from 150 dinars per litre (around $0.10) to 250, following on from a previous hike earlier in the year.

The measure caused industry outrage in the crisis-hit country, where some regions are still waiting for costly post-war reconstruction.

"The cement industry is the only one that has been self-sufficient from 2016 until now and hasn't raised prices," Ammar Al-Saadi, deputy director of the cement manufacturers' association, told AFP on Tuesday.

He said public and private activity in the sector employed almost 50,000 people directly or indirectly, from factory workers to truck drivers.

The association warned of "enormous losses" in the sector, calling on authorities to reverse the decision.

Cement manufacturers will have to choose between "closures, which would lead to thousands of lay-offs... or an increase in the sale price of cement to at least $10 a tonne," a statement from the association said.

"That would increase the burden for the population and the state, which is embarking upon the reconstruction of the country and wants to develop infrastructure projects."

The subsidised fuel price for cement manufacturers was originally approved in exchange for their commitment to cap the price of cement.

"The decision will lead to an additional cost of 35 million euros [$41 million] per year, which could lead to heavy losses for the business," said Adham Al-Sharkawy, head of Lafarge Iraq.

In-depth: Exploiting the fate of the disappeared on Iraq's election campaign trail - edited from @alaraby_ar https://t.co/WL7Ejt9D4d

— The New Arab (@The_NewArab) September 22, 2021

He said the measure could threaten more than 1,000 jobs if the firm is unable to pay salaries.

Iraq is the number two oil producer in the Organization of the Petroleum Exporting Countries, commonly known by the acronym OPEC, and almost all of its revenues come from the sector.

Authorities say they want to diversify the economy to reduce their dependence on the sector.