The supply of cement has improved following resumption of operation after plants shutdown because of maintenance and spare work, but increase in the cost of production is adversely affecting the price mechanism.
Nearly all plants have resumed production as per their specified capacity, leading to improvement in supply of cement. The government has allowed import of cement, but substandard cement would hurt the construction industry and in the long run would weaken the infrastructure aimed to bolster the country's economy and sustained growth in the current fiscal year, a manufacturer said.
The general body meeting of All Pakistan Cement Manufacturers Association (APCMA) was held in Lahore on September 8, 2005, which reviewed the situation relating to cement prices and supplies, as well as impact of government decision to allow unrestricted imports of cement without payment of import duty and 6 percent withholding tax.
In relation to current supply position and impact on prices, there was general satisfaction that following unscheduled stoppages of various plants during June and July, 2005, and successful completion of optimisation program of some units, the supply position had improved during August. Total quantity released exceeded 1.50 million tons for the domestic and exports markets, showing an increase of 17.60 percent over the corresponding month of last year.
Dispatches are likely to continue to increase during the year as additional capacity comes on line. These developments have had a salutary effect on prices, which ranged from Rs 240 per bag to Rs 285 per bag which are considerably off from the spike in prices witnessed in June.
The government's decision to allow unlimited quantities of imported cement at nil duty and without payment of withholding tax was also discussed in detail. There was general agreement that pending augmentation of capacity during the remaining part of the financial year, some imports should be permitted on concession and APCMA had made a recommendation to the government accordingly.
However, the government seems to have gone overboard in allowing imports to be made without any duty at all, thereby withdrawing all protection to the domestic manufacturers who still have to pay different rates of customs duty on their imported inputs like fuel and lubricants, Kraft paper, coal and stores and spares. It is also not understood why import of cement should have the special treatment of exemption from income tax.
Also, contrary to APCMA's recommendations of allowing import of cement up to 500,000 tons on concessional basis as a buffer stock, the Government has permitted unlimited imports which could cause injury to the domestic industry if the commodity is dumped by neighbouring countries into Pakistan's markets.
It was also regretted that in the matter of levy of excise duty on this item, no action has been taken by the Government to abolish it, which contradicts the objective of achieving lower prices of this essential commodity for the public and for development activity. The government taxes still amount to over Rs 70 per bag.
It was also brought to the notice of APCMA that substandard cement, which does not conform to Pakistan Standard (PS 232:1983(R) is being offered from India and China. It was hoped that Government would take care not to allow low grade cement to be imported into the country which if used could endanger the stability of load bearing structures in view of its lower strength.
Major accidents have been reported in China and India following consumption of substandard cement. The equivalent standard from China is GB:175-85-1985 and from India IS:269-1976.
Lastly, it was agreed that all efforts would be made to bring even larger quantities into the market so that price stability could be assured, but the recent price hike in furnace oil and diesel prices has again sharply increased cost of power generation and transportation which may have an impact on prices.
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