The All Pakistan Cement Manufacturers Association (APCMA) has appealed to the government to remove bottlenecks impacting cement industry with four out of 22 units having been shut down due to mounting losses.
An APCMA spokesman said cement manufacturers have yet to pass on the large impact of rapidly increasing input costs (ie, coal, electricity, diesel, paper sacks and transportation cost). Current cement prices range from PKR340-355/bag in different markets. While inflationary pressures over the past three years have impacted rates of every item, stiff competition within the cement industry and surplus capacity (particularly in the north) have meant that Pakistan producers are unable to pass on these increases to customers.
The spokesperson said construction activity has come to a standstill due to a drastic cut in development spending and an increase in cement prices would further impact any activities that do actually take place.
Government levies account for 30% of price of a 50kg bag of cement. “These levies are highest in the region. They include federal, provincial excise duties amounting to PKR37 per bag which is unjustified, over and above GST at 17 per cent, ie PKR45 per bag. In total government levies exceed PKR80/bag.”
He added that governments the world over encourage use of cement as it is major component in construction activities and construction sector is biggest employer of semi and unskilled labor force of any economy. The removal of excise duty would improve the viability of the industry, and instead of raising cement rates, the sector will be able to maintain prices and give a boost to construction business.