Mixed court orders for Pakistan's cement industry
The cement industry has received mixed court orders from Supreme Court of Pakistan and Peshawar High Court on environmental/water scarcity and the gas tariff issue, respectively last week.
Lucky Cement Ltd has received a stay order from the Peshawar High Court bench, which has temporarily directed the gas utility company Sui Northern Gas Pipelines Ltd (SNGPL) not to collect a higher tariff from the cement company. The court also sought written response from the petroleum secretary, Oil and Gas Regulatory Authority (OGRA) and SNGPL to the petition filed by the Lucky Cement Ltd challenging the OGRA's notification for the 142 per cent increase in gas tariff on 4 October 2018. It was pleaded that tariff was proposed to be increased by the Economic Coordination Council (ECC) on 27 September 2018, and not by the federal cabinet, which was a requirement in light of the recent Supreme Court judgement.
Meanwhile, the court judgement over the drying out of Katas Raj pond is heading for towards a conclusion. The Supreme Court issued three successive judgements during November 2018. The first stands for a ban on extracting underground water. Secondly, it appointed a special committee to visit the premises of DG Khan Cement factory in Chakwal district to determine how it stored water for its requirement. Thirdly, the Supreme Court (SC) on 19 November concluded the Katas Raj case and ordered DG Khan Cement Company Ltd to deposit PKR100m (US$0.743m) into the SC Dam Fund – PKR80m as payment for water utilised by the factory and a PKR20m penalty for attempting to mislead the apex court.
DG Khan Cement statement before the court decision read: "The company reported in its recently released 2018 annual report that during the current year, the honourable Supreme Court of Pakistan, while taking notice of water shortage and environmental pollution in Kahoon Valley as well as depletion of water reserves at Katas Raj Pond, alleged that it is being caused by the cement companies operating in its vicinity, one of which is the cement segment of the group itself (Khairpur, Chakwal plant). Resultantly, the honourable Supreme Court of Pakistan, vide its order dated 8 May 2018 and subsequent order dated 10 July 2018, directed cement companies in the vicinity to make alternate arrangement of water supply within six months to preserve underground water resources. In the meanwhile, as per the aforesaid order, the Government of the Punjab ('GoPb') has been directed to charge the group for usage of underground water by installing water meters that has not yet been done by GoPb. Subsequent to year end, the group has furnished a bank guarantee amounting to PKR600m dated 10 July 2018 in favour of honourable Supreme Court of Pakistan on its order that will be encashable by the GoPB, if the alternate arrangements to preserve water resources have not been made within the prescribed period.
The group has taken immediate steps to make alternative arrangements such as rain water harvesting, reduction of water consumption by adopting conservation techniques, converting waste heat power generation through steam cycled with an air cooling system. Progress on all alternative measures is satisfactory, a rain water reservoir has been constructed and contract has been signed for the supply of air cool waste recovery system. No Objection Certificate (NOC) in respect of alternative arrangements has been obtained from Environment Protection Agency, GoPb.
