Increase in gas price may impact Pakistan cement industry

Pakistan's government intends to increase gas prices effective from 1 January 2020 for all types of commercial consumers, including the cement industry. 

A research house anticipates a large gas price increase, which could eat into the margins for a range of sectors such as cement, chemicals, fertiliser and textiles.

The proposed prices hike will be considered by the petroleum division, which will then forward their proposal to the Economic Coordination Committee (ECC), Government of Pakistan for final approval.

According to an analyst of Intermarket Securities Ltd, the Lucky Cement is likely to be the most-affected cement player given its gas-based captive power. However, a large increase in gas tariffs is expected to be positive for the cash-flows of the two gas utilities and other players.