All Pakistan Cement Manufacturers Association (APCMA) Chairman Tariq Saigol expressed concern over reports about the government granting permission for the zero-rated import of cement and it’s plans to place restrictions on exports by levying Export Duty.
He said investment by domestic and foreign entrepreneurs exceeding one billion US dollars had taken place in the sector and he said the government’s plans could prove disastrous for the cement business. He said wholesale cement prices on average remained between Rs 240 to Rs 250 per bag depending on brand preference and the distance of a particular market from the nearest factory, during the first half of the last fiscal year (July-December 2004). The price of a cement bag has increased by Rs 20 per bag on average during the first seven months of the 2005 calendar year and cement prices are on average Rs 270 per bag at the wholesale level inclusive of transportation costs, dealers’ commission and other incidental charges, Saigol added.
According to him, the reason for the increase in prices by Rs 20 to Rs 25 per bag during 2005 is due to the increase in prices of furnace oil and gas prices, the increase in coal prices and what he called the substantial increase in interest rates by over 100 percent, the hike in transport charges and inflation in general. Tariq Saigol added that these factors had led to an increase in the cost of production which he said was beyond the control of manufacturers.
He said that in spite of the best efforts of the APCMA’s members to keep prices at a reasonable level, he said reports had been received of cement being sold at higher prices by retailers. We urge buyers to resist purchases at exorbitant prices so that profiteering by retailers does not take place, he added.
Tariq Saigol said APCMA members were making efforts to increase supply by curtailing exports and expediting the pace of augmentation plans for optimisation and increasing capacity. He added that the present annual production capacity of 19.5Mt was the maximum capacity and he added that additional capacity of 3.275Mt would come on stream by December 2005 and an additional 1.6Mt would be available between January and June 2006. In 2006-2007, total capacity will increase to 36.5Mt and we will need to find markets other than Pakistan to place this huge production, he added.
