Price of timber shoot despite government fixed arte in place
Timber: The price of sawn timer, at least in the capital, is going back to the 2012 levels, when construction was booming and timber prices skyrocketed.
Despite the price being fixed by a national resource pricing committee, sawn timber is sold much higher than the fixed price today. To ensure that natural resources are available, accessible and affordable to the general public and for the country’s socio-economic development, the committee fixed the price of sawn blue pine timber at Nu 286.8 a cubic foot (cft) and Nu 279 for mixed conifer sawn timber, which is still valid.
Sawmills in the capital charge between Nu 340 and Nu 360 for blue pine and Nu 290 for mixed conifer sawn timber.
Five sawmills were visited to compare prices.
The increasing demand for timber, especially after the ban on construction loans was lifted last year has led to sawmills taking advantage of the increasing demand according to some in the construction sector.
“We’re aware of the price fixed by the government, but we won’t get any if we insist on the fixed price,” said one who didn’t want to be named for the fear of not getting timber. He refused to name the sawmill.
Another said sawmills would deny having timber to new customers even if they actually have timber. “We have no option than to buy with the price demanded as delaying construction is more expensive,” one builder in Babesa said.
A Thimphu resident building a house, Sherab, said he bargained the price knowing that the NRDCL rate is far lower than what the sawmills charged. “They said they sell at the fixed price if only they bought logs from NRDCL,” he said. He was charged Nu 360 a cft, but he bargained for Nu 340. “I had no choice,” he said.
Asked why they didn’t complain to authorities, they said complaining was a waste of time as they have to run from office to office and it also delays their work.
But foresters disagree. They said that customers are not even willing to produce receipts so that they can penalise the sawmills that overcharge. “Customers are not cooperative. To make the rule work, we need the support of the customers,” a forestry officer said. “It is the customers who are spoiling the saw millers.”
A notification in 2011, which still stands, states that both sawmillers and customers will be penalised for not following fixed rates. According to the notification, both sawmillers and wood-based industries would be levied a 100 percent penalty on the approved price for the first offense, or a prison term equivalent to the value of the amount of fine imposed. “If detected for the second time, in addition to the first penalty, they’ll be barred once from participating in the timber allocation system.
People purchasing timber above the fixed rate would be charged Nu 100 for every cft purchased, or serve a prison term equivalent to the amount of fine imposed.
Thimphu’s dzongkhag Forestry Officer (DFO), Phento Tshering said they take action when evidences are provided .
“People complain verbally, which makes it difficult to take action immediately,” he said. “On the other hand, saw millers always produce all the necessary documents when we follow up on verbal complaints.”
Officials said that even with the price fixed by the pricing committee, saw millers have a good profit margin as they need not purchase logs through auction. Saw millers are allotted logs unlike in the past. “The rate applies to logs purchased from private forests and community forests,” forestry officials confirmed.
Those in the construction business said they look for timber in other dzongkhags as prices in Thimphu are higher, a trend that was rampant before 2012.
Norbu Tshering, another builder said there are more builders and fewer suppliers in Thimphu, which encourages saw mills to charge exorbitant prices.
Many feel that the problem would be solved if NRDCL open more sawmills. “They will not have shortage of logs and it will help bring down the market price,” said one. “NRDCL should open more sawmills in all the dzongkhags, that would be effective.”
By Chechey and Rosmi Rana