Rajesh Rai, | Phuentsholing

The country’s oldest cement manufacturing establishment, Penden Cement Authority Limited (PCAL), in Gomtu is yet to resume production since it closed down on February 4 this year.

The management said it is shut down due to the shortage of quality coal, a major constituent required for manufacturing cement.

According to the chief executive officer (CEO), Tenzin, the plant needs about 150MT of coal per day in order to produce cement.

“It needs to fulfil certain quality parameters as well,” he said, adding that PCAL buys coals from both Bhutan and India. “We have some coal stock but the quality is not good.”

Tenzin said coal from Bhutan has high ash content and needs to be blended with high quality imported coal to meet quality parameters and for economic reasons.

PCAL management also attributed the issue of coal shortage to the crisis in India and the Ukrainian invasion.

Officials said closure of the international borders has also badly affected PCAL’s supply chain, including the sourcing of the coal.

According to Tenzin, the cost of coal has gone up by more than 100 percent in the past few months and it is still not available.

“In addition, PCAL has to follow the procurement norms that has its own cycle time and challenges in a volatile market.”

PCAL produced about 1,000 metric tonnes (MT) of cement during the normal pre-covid days and below 500MT during the Covid days. In 2021, PCAL produced an average of 459MT of cement daily.

Meanwhile, PCAL has submitted the coal issues to the economic affairs ministry and other concerned agencies.

Officials said they are discussing with stakeholders, including Indian counterparts. They tried operating the plant on two occasions with the available coal but due to quality issues, production had to be suspended.

Tenzin said that after awarding supply orders to more than a dozen coal suppliers, PCAL is expecting to receive higher quality coal within this week.

“We will resume the production by the end of the week,” he said, adding that the PCAL board and management have considered many strategies and action plans to source coal but the market is volatile.

He said they are also considering alternative fuels to supplement coal in the long term.

RAA Preliminary Audit Observation

The shutdown comes at a time when the requirement for cement is at its peak in the country. The Royal Audit Authority (RAA) issued a preliminary observation pointing out that weak management led to a decline in PCAL’s performance in 2019 and 2020.

The chief executive officer, however, said as it is still a preliminary audit observation that may be resolved soon.

“The company incurred a financial loss in 2020 for the first time since its inception,” he said, citing pandemic, closure of international border, series of restrictions and strict health protocols as the reasons.

He also said a cement manufacturing company cannot do well when the construction sector is badly affected by the pandemic as it’s not only the construction sector that influences PCAL’s performance or profitability.

PCAL management said global pandemic had a huge impact on performance of the company and the well-being of the employees who had to endure a series of lockdowns, community transmissions and abnormally high risks and extraordinary challenges while trying to keep the business afloat.

“If not for the resilience and the commitment of the board, management and employees, the company would not have survived altogether,” Tenzin said.

He said the financial losses would have been much higher if the employees failed to work harder in containment modes and that too constrained by the limited resources. “The company did not lay off any of its employees and continues to pay employees their salary.”