Private traders in rush for Pakistan cement

Private traders in rush for Pakistan cement
Published: 01 October 2007

In August, it was announced at the India Pakistan Commerce Secretary level
talks, that the Indian state-owned MMTC would be allowed to import cement
from Pakistan without a BIS certification. This waiver would be available
for 150 days from the date that Pakistani companies apply for a license.
This was meant to cool prices of cement which is selling at Rs 240 a bag in
some markets.
 
A MMTC team has now returned after a local review of Pakistan facilities. It
reckons that Pakistani cement could be cheaper by Rs 20 a bag, though a firm
fix can be obtained only when an order is placed.
 
MMTC says some of the 3Mt that Pakistan is currently exporting, can be
diverted to India and there is another 8Mt of capacity to spare. 70% of the
capacity is in the northern part of Pakistan, closer to the Wagah border and
another 30% in the vicinity of Karachi.
 
The limited period exemption given to MMTC from quality certification for
imports has been overtaken by events. At that time, not a single Pakistani
company was entitled to export to India. Now, eight have obtained BIS
certification and a license. So any Indian company can import under Open
General License, though not a single one has done so, so far, according to
commerce ministry officials.
 
But logistics remains an issue for navigation. The MMTC report says rail or
road link is a better option as Karachi is 1500km away from most plants.
But handling capacity is limited at the Wagah border. Cement will have to be
unloaded and loaded again in Amritsar for customs inspection, thus adding to
the cost. Pakistan freight rate for the short distance between Atari and
Wagah alone is Rs 300 a tonne. There are not enough wagons, and Pakistani
wagons are half the Indian size.
 
Also, of the two state-owned trading firms given BIS waiver, Tamil Nadu
Cement Corporation has floated a 1.8Mt tender. MMTC has not yet
done so. With another five Pakistani companies likely to get a license next
week, private companies might beat the state trading entities to imports.