Peaceful relations with neighbouring countries particularly India and Afghanistan will not only bring prosperity to the region, but it will also create new opportunities for Pakistani cement industry to capture these two export markets by utilising full potential of its under-utilised cement plants.
Talking to Business Recorder, Noman Hassan, Chief Operating Officer (COO) of Lucky Cement, said, "Pakistan currently has 42 million tones cement production capacity but due to lower demand in the country the cement sector is hugely under-utilised and hence almost 70 percent cement plants are in losses."
He said that demand of Pakistani cement was increasing in India because of its superior quality and better pricing and it was also very beneficial for cement plants based in north to capture the Indian market because of logistic advantage. "Sri Lanka and Africa are also the emerging export markets for Pakistani cement. Therefore, Lucky Cement is planning to set-up new cement plants in DR Congo and Iraq. The Board of Directors has already given the approval for both the projects and work is underway to start construction of both the plants," he informed.
He said that the cement sector was also facing many difficulties on domestic front including lack of mega social sector development projects and a slow construction activity in the country. While, he said, cost of doing business is also increasing substantially, especially the energy cost.
"Energy is the major cost for a cement plants; therefore, if energy cost will keep increasing it will have a constant impact on the cement prices too," he said. He informed that imported coal is too costly and at the same time government has imposed 10 percent duty on import of used tyres, being used as alternate of coal. Imposition of import duty on used tyres has makes it useless as an alternative of coal for energy production for cement industry, he added.
He urged the government to review decision to impose duty on used tyres so that cement industry can adopt this relatively cheaper source and curtail rising cost of production. Talking about the reduction in Federal Excise Duty (FED) on the cement in recent budget, he said that earlier it was indicated that Rs 250 per ton will be cut, but it was slashed by Rs 100 per ton, which is negligible and not according to the increase in cost of production.
Noman informed that Lucky Cement has two plants, one is located in Lakki Marwat, KPK and other plant is in Karachi. Lucky Cement's Lakki Marwat plant is working on 50 percent capacity only due to lower cement demand in the country. Major exports, expect India and Afghanistan, are being made through southern plant because of sea port advantage.
"Now we are focusing more on local market as export of cement is not a profitable option anymore," he said. Middle East, which used to be an attractive export destination for Pakistani cement now has its own sufficient production to cater to the local consumption, he added.
He mentioned that Lucky Cement has its own power generation units at its both production facilities in Karachi and Pezu, Khyber Pakhtunkhwa. These power generation units are capable of producing around 175 MW of electricity altogether and since 2010 both the plants have installed state-of-the-art Waste Heat Recovery (WHR) systems which are contributing an additional 22 MW of electricity converted out of the wasted heat that it captures and re-use to produce energy.
Noman said that Lucky Cement, with the ability and capacity to contribute to the energy needs of the country, is much willing to sell the excess electricity to the Government at much nominal rates. He said that as Lucky Cement has sufficient power, it is currently negotiating with Peshawar Electric Supply Company (PESCO) for supply of 15 to 20 MW of power to it, which can help overcoming the severe power crisis in Lakki Marwat and Dera Ismail Khan. "We are willing to sell additional electricity to the electric supply companies of KPK through our Plant in Darra Pezu, KPK. We have already started supply to HESCO," said Noman.
Lucky Cement, Pakistan's largest cement producer with production capacity of 7.75 million tons per annum, is also addressing issues of environmental degradation and the company has invested in many projects that are ecological-friendly and energy efficient. Due to this innovative and environment-friendly approach, Lucky Cement has qualifies for the Clean Development Mechanism (CDM) under the Kyoto Protocol of United Nations, he added.
Talking about the Tyre Derived Fuel Project at Lucky Cement, Noman informed that Lucky Cement has taken another lead by shifting from coal to Tyre Derived Fuel (TDF), generated by burning shredded tyres. "We have invested approximately one billion Rupees to set-up TDF plant at Lucky Cement's plant in Karachi. This project is a value-addition in cement manufacturing sector as it contains about the same amount of energy as oil and 25 percent more energy than coal," he added.
Apart from tyres, Lucky Cement is also considering using other alternative fuels from raw materials like Municipal Solid Waste (MSW) and agro by-products, which are known as Refused Derived Fuel (RDF). The company is also initiating projects in the field of education, health, environment management and community development under Corporate Social Responsibility (CSR) and Lucky has been assessed with a Level Check 'A' in its first ever Sustainability Report by the Global Reporting Initiative (GRI), he informed. Noman called for working on alternative energy resources to control the rising fuel prices to compete in the international markets.
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