Cement producers in Punjab face a severe cost disadvantage. This stems from a new provincial royalty structure. The Federal Constitutional Court recently reviewed the levy. The new structure charges six per cent on factory prices. It replaces a fixed rate for raw minerals. The court raised concerns but delayed a final ruling. Judges adjourned the case indefinitely for more instructions.
The revised formula widens the regional cost gap. Punjab manufacturers now pay PKR1514/t. This translates to roughly PKR76 per bag (US$27). Khyber Pakhtunkhwa producers pay a lower fixed rate. Their tax equals about PKR525/t. This amounts to just PKR26 per bag. Khyber Pakhtunkhwa players can easily undercut Punjab prices. Their price advantage reaches PKR50 per bag. Affected companies include Pioneer Cement, Maple Leaf and DG Khan Cement.
Factory owners challenged the legality of the tax. They argue royalties apply only to raw minerals. Governments should not tax finished commercial products. Justice Hasan Azhar Rizvi questioned the formula. He noted that manufacturers will pass costs down. Ultimately, Punjab consumers will pay much higher prices.
By Abdul Rab Siddiqi, Pakistan
