ECC unlikely to penalise cement industry

ISLAMABAD: The Economic Coordination Committee (ECC) is unlikely to penalize cement industry for current increase in prices, well informed sources told Business Recorder.

Ministry of Industries and Production (MoI&P) will submit a report to the ECC prepared after a detailed meeting with the cement industry on the instruction of Finance Minister, who is also the chairman of the ECC.

On October 26, 2018, Prime Minister’s Advisor, Abdul Razak Dawood heard the viewpoint of cement industry about recent price hike and cement shortage in some areas of the country.

According to sources, cement industry maintained that they had occurred some seasonal fluctuation in supply and demand besides changes in supply due to service, repair and maintenance of some plants and termed current increase in prices a result of increase in coal price and rupee depreciation.

The industry further argued that cement sector is not receiving any subsidy from the government.

Cement sector is paying billions of rupees in taxes to the government e.g. Rs111.201 billion of taxes were paid in financial year 2017-18, in which the share of federal excise duty was Rs50.530 billion while General Sales Tax was Rs60.671 billion. Freight cost of cement sector is high, which is Rs54 per bag.

Pakistan’s cement prices and profit are low in the region, while taxes are higher. Average Market Retail Price (MRP) of Pakistan, India and Sri Lanka are Rs579, Rs680 and Rs657 respectively whereas per bag taxes of Pakistan, India and Sri Lanka are Rs159.13, Rs148.75 and Rs95.46 respectively.

The ECC will be further informed that recent price hike was also due to wholesalers and retailers as factory price was comparatively low. Therefore, the same may be controlled by the local Government administration.

Cement sector has exported 4.746 million tons in financial year 2017-18 and 19.436 million tons of surplus availability for export is expected in financial year 2020-21. Cement industry can earn $600 million to $ 1 billion through export.

Cement sector is also in process of capacity enhancement from current 54.229 million tons to 68.184 million tons in Financial Year 2019-20.

The ECC would be requested not to penalize the cement sector which is performing well without any subsidy like other sectors.—MUSHTAQ GHUMMAN