Gov't not expected to compensate contractors affected by rising steel prices

Published October 30th, 2000 - 02:00 GMT

The government is not expected to compensate contractors hit with financial losses caused by rising steel and iron prices since late 1999, said a senior official of the Jordan Construction Contractors Association on Saturday.  

 

With the formation of the Private Steel Marketing Company, pooling together ten steel and iron companies, the price of steel bars, which are used to reinforce concrete in the construction sector, jumped to JD285 from JD225.  

 

Contractors believe the price hike was an indicator of a monopoly in the country's steel and iron industry and a dangerous result of the marketing company's establishment.  

 

“The minister of trade and industry, Wasif Azar, told us very recently that contractors will not be compensated as there is no legal basis to rely on,” said Sahel Majali, head of the association. However, Azar told the Jordan Times that “the Prime Ministry decided that the increase in steel and iron prices was not due to a state decision.”  

 

Thus, the compensation sought is usually paid out only if the price increase was a result of a government decision. “If there is a way to compensate contractors regardless of who caused the increase in steel and iron prices, it is the role of regulations and laws to determine that,” he added.  

 

According to Majali, the minister told contractors that “it is up to you to go to the courts.”  

But, Azar said that “if there is a difference in views, it is the role of the court to decide.”  

“Some contractors have been faced with real financial problems ... one contractor has until now lost JD200,000,” Majali said.  

 

At least 400-500 of Jordan's 1,200 contractors have been affected by the hike in the steel and iron prices, experts say. In early July, the Ministry of Trade and Industry formed a special committee to investigate whether the Private Steel Marketing Company is monopolising the steel and iron industry.  

 

The issue, then, was referred to another committee in the Ministry of Public Works and Housing which showed an intention to compensate contractors.  

 

In early September, some association contractors were quoted as saying that Minister of Public Works and Housing Hosni Abu Gheida, promised to look into the association's demands of fair compensation.  

However, said Majali, Abu Gheida also recently told contractors that since there is no law to protect consumers from a monopoly, there likely would be no compensation.  

 

The Antitrust Law which should have been debated during the last extraordinary session of Parliament has been postponed to the ordinary session in mid-November.  

Contractors hope the Lower House will decide that the steel marketing company is monopolistic and ought to be disbanded.  

 

An informed source in the association told the Jordan Times that the association is looking for a fair government compensation of JD40 per tonne for steel bars, stretching back retroactively to late 1999.  

However, compensation, even if it happened, does not mean that the monopoly in steel and iron industry is over, experts in the sector say.  

 

Consequently, the association renewed its demand on Saturday to put an end to the monopoly on the steel and iron industry in the local market. “Some contractors have been subjected to heavy losses due to contracts being signed according to the old price of JD225,” said Majali.  

 

He added that the marketing company only cares about its personal advantage even if it is upon others' and the national economy's expenses. “Is it the right of only one company to impose its conditions on the market, contractors and citizens?” he said, adding that [monopoly in the steel and iron industry] contradicts with Jordan's integration into the new global economy.  

 

Although Jordan's integration into the World Trade Organisation, globalisation and free trade market, it still encourages monopolies in some sectors, the association head said.  

 

Contractors usually prefer to purchase local other than imported steel, because the government levies 30 per cent customs duties on imported steel and iron.  

 

We call on the government to remove the duty on imported steel, in order to allow it to compete with the locally produced steel, and break the marketing company's monopoly, said Majali. -- ( Jordan Times )  

 

By Khalid Dalal

© 2000 Mena Report (www.menareport.com)

You may also like