The Ministry of Economy has started fining dealers who sell cement at above the fixed prices of Dh14 per bag from the factory and Dh16 retail.
Inspections carried out in co-operation with local government departments uncovered a large number of violations.
"Warnings have been issued and fines were imposed for repeat offences," Ali Obaid Al Shamsi, the ministry's Director in Dubai, told Emirates Business.
The fines range from Dh1,000 to Dh20,000 depending on the number of offences. The ministry also has the authority to close shops.
Al Shamsi said in April the ministry reached an agreement with the Cement Producer Society that the price should be reduced from Dh16 to Dh14 per bag. The society, which represents factory owners, agreed to lower the price. The price for end-users was set at Dh16.
But inspections revealed that the lower prices were not being observed. "Retailers said prices had not been reduced by producers so they could not reduce prices for end-users, while producers assured us they were complying with the agreed price," said Al Shamsi. "We discussed the situation with the society and its members have agreed that the ministry should play a mediator role to deal with such claims."
Retailers are now asked to sign an undertaking confirming that they will not sell cement to end-users for more than the fixed price. The ministry, in turn, directs the retailer to factories that have agreed to charge Dh14 a bag.
"The move is intended to ensure end-users benefit from reduced prices so construction work can be pushed forward," said Al Shamsi. "The ministry has intervened between cement producers and retailers to mediate over claims that factories have failed to stick to the agreed price. Retailers are urged to approach the ministry and sign an undertaking that they will not sell a bag for more than Dh16. In return, they will be given a letter enabling them to buy supplies for Dh14 per bag. The letter authorises them to buy the required quantity, which is specified according to their storage capacity. The new mechanism ensures lower prices for end-users."
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