The Ministry of Industries and the cement manufacturers are said to have failed to resolve the dispute over cement pricing due to the inexplicable absence of Prime Minister's Advisor on Industries Mian Manzoor Wattoo, sources in cement industry told Business Recorder.
On Wednesday, Wattoo had intimated to Finance Minister Naveed Qamar that he would hold a meeting with cement manufacturers, but at the eleventh hour he was not available to chair the meeting despite the fact that the meeting was rescheduled thrice.
According to sources, Wattoo had reservations over the appointment of Dr Ashfaque Hasan Khan, special secretary, Finance by the ECC to investigate the reasons behind the sudden increase in cement prices.
Cement manufacturers claim that they raised cement price to Rs 400 per bag because their input costs increased manifold. On Wednesday, the ECC directed the industry and finance ministries to summon the cement manufacturers and determine the reasons behind the increase in cement prices above Rs 100 per 50-kg bag.
Both the ministries held separate meetings with the cement manufacturers and maintained that there was no justification for the price rise because input costs had not witnessed a substantial rise. The cement manufacturers, who were angry over reports that the government is considering a crack down on the cement sector, did not agree with the input cost calculations, presented by the industry ministry during the meeting. Officials of the industry ministry revealed input costs of Rs 220-230 per bag but cement manufacturers did not agree with the calculations, the sources added.
Independent analysts calculated cement's per bag cost at Rs 230-240. "Our input cost is about Rs 400 per bag and we will prove it in our calculations and we ask the ministry to refer it to the ECC", a representative of cement manufacturers was quoted as saying in the meeting. All Pakistan Cement Manufacturers Association (APCMA) was also summoned by the finance ministry wherein they were given a tough time with regard to their estimate of input costs, the sources said.
"We are already suffering a loss and any action by the government will discourage investment in the country," said the horrified APCMA representatives. They were also angry over the proceedings being conducted by the Competition Commission of Pakistan (CCP) over their alleged profiteering.
Sources said the government was considering withdrawing recent increase of 20 percent in the federal excise duty (FED) on cement because of its negative impact on construction industry throughout the country. The government had raised FED by Rs 150 per ton to Rs 900 from Rs 750 in the federal budget besides enhancing one percent general sales tax (GST). Industry sources claimed that with an increase in the GST and the FED, the tax impact on cement has raised the price by Rs 85 per bag from July 1, 2008, while earlier stood at Rs 73 per bag.