Pakistan: construction sector demands reduction in cement prices

The Association of Builders and Developers of Pakistan (ABAD) has called on the government to reduce the price of cement in country or to allow the importation of supplies from alternative sources.

In their appeal, ABAD accused the All Pakistan Cement Manufacturers Association (APCMA) of not passing on energy cost reductions, despite promises to that effect made to the government. Coal and oil prices have fallen by more than 50 per cent, while the gas infrastructure development cess (GIDC) – a levy on industries that use gas – does not apply to the cement sector.

The All Pakistan Cement Manufacturing Association rejected ABAD’s complaints, stating that they were baseless and accusing the construction body of trying to hurt the credibility of cement manufacturers through the use of inaccurate statements and statistics.

The APCMA maintained that the sector is heavily regulated and observed that the average price of a cement bag of PKR475 (US$4.53) includes PKR135 (US$1.28) of taxes. Furthermore, Pakistan’s corporate tax of 32 per cent – the highest in the region – and additional social charges raises the total tax payable to around 39 per cent.

The APCMA also rejected comparisons between Pakistan and Iran. Electricity costs are up to five times lower in the latter, while oil is cheaper still, at US$50/t as compared to US$280/t in Pakistan. The APCMA added that Indian cement prices were around US$5.13/bag, rejecting ABAD’s claim that the level was US$2.79.