Pakistan production costs set to increase

Pakistan cement producers fear further production costs increases after the Gas Infrastructure Development Cess (GIDC) has been increased from PKR50/mmbtu to PKR100. This will push up costs for those producers with gas-fed captive power plants, such as Lucky Cement, DG Khan Cement and Maple Leaf Cement Company.

The Pakistan Tribune quoted Farhan Mehmood of Sherman Securities as saying that the increase could  lead to an increase of cement prices by PKR10-12/bag.

The tax was initially levied on industrial consumers and captive power plants in July 2012. However, a stay was granted by the Peshawar High Court which was vacated by Supreme Court recently.

The All Pakistan Cement Manufacturers Association has said that production costs have increase rapidly over the past few months due to higher transporation costs, a rise in electricity tariffs, labour charges a hike in interest rates the devaluation of the Pakistan rupee and an increase in gas prices.