Pakistan: export price for Afghanistan ‘unrealistic’

Published 30 November 2010

Cement exports to Afghanistan are grossly under-valued due to intense competition, according to Pakistan industry sources. They told Business Recorder  on Saturday that US$42/t price quoted for export to Afghanistan is not realistic.



Since no country in the world could supply cement to Afghanistan at less than US$60/t, they demanded that the government should fix minimum export price of cement to Afghanistan at US$55/t.



The ill-health of cement industry could send non performing loans (NPLs) of banks which have reportedly lent over Rs 125 billion, skyrocketing in the absence of immediate remedial measures, they feared. They warned the government that its inaction to facilitate the cement sector immediately would result in the closure of almost 50 percent units.



Explaining the present scenario, sources said that the cost of inputs of manufacture of cement have escalated at the same proportion as that for other manufactured items but cement selling rates are still prevailing at 2005 level due to intense competition because of over-capacity, continuing heavy government levies which account for almost 30 per cent of selling prices and drastically reduced demand due to economic slump.



They urged the government to rescue the ailing cement industry that has posted huge losses during last fiscal year and in the first quarter of this financial year. Energy is the major input of cement industry and the rates of all fuels like gas, coal; and furnace oil have doubled during the last three years.