ISLAMABAD: The cement manufacturing plants have increased per bag price by Rs20 -from Rs490 per bag top Rs510 per bag, Business Recorder learnt.

Cement dealers and distributors told this correspondent on Tuesday that the plant owners in North Zone instead of reducing cement prices have reduced supply to dealers and fixed daily quotas.

They said that as construction activities began after the lockdown cement manufactures began raising prices and factory owners have informed dealers that prices are likely to further go up by Rs40 per cement bag - from Rs510 per bag to Rs550 per bag.

A dealer previously getting 800 bags per day is now receiving a maximum of 150-200 bags as the cement manufacturers are piling up stocks which would be sold at escalated prices.

When this correspondent tried to get the view point of the Ministry of Industries on the cement price escalation no official was available to comment. However according to sources the Ministry of Industries and Production has no role in monitoring or fixation of cement price.

Finance bill 2020-21 reduced federal excise duty on cement by Rs 0.50 per kg, with cabinet ministers arguing that this incentive would lead to a decline of Rs 25 per bag but the cement manufactures have followed the example of sugar and flour millers association and jacked up the prices.

People associated with construction industry said that once the construction industry starts operating at capacity cement rates are likely to further go up as there is no effective authority to check cartelization in the country and everybody is free to charge whatever price they want.

The sources said that the Ministry of Industries and Production has no capacity to determine production cost of cement and therefore cannot fix it's price.

When contacted an official of APCMA North Zone, said he was unaware of any such increase in the price of cement and stated that the association has not taken any such decision is this connection so far.

The official provided the following official statement on the overall performance of the cement industry during 2019-20: after posting a reduction for three consecutive months, cement despatches increased by 29.94 percent in June 2020 to 4.623 million tons from 3.557 million tons in June 2019.

According to the data released by All Pakistan Cement Manufacturers Association (APCMA), the domestic cement uptake increased by 19.63 percent to 3.835 million tons in June 2020 from 3.206 million tons in June 2019. Moreover, exports also increased by 123.89 percent from 0.351 million tons in June 2019 to 0.787 million tons in June 2020.

Overall the cement consumption during July-Jun 2019-20 inched up by 1.98 percent to 47.81 million tons solely on the strength of higher export growth of 19.8 percent that crossed 7 million ton mark after a long time. The domestic consumption however contracted by almost one percent, the first such decline in the last six years.

The performance of cement units in different zones depicted the strength of the south zone in exports and the north zone in local consumption. In fiscal 2019-20 the mills in North Zone despatched 34.327 million of cement to the local market that grew by 6.07 percent over the consumption in the previous fiscal. However it lost 22 percent of the export market by exporting only 1.97 million tons of cement. The region lost Indian market due to protective policies of Indian government and Afghan market due to decline in construction activities in the land locked country.

In South zone the mills were badly hit by low consumption in the region as their dispatches declined by 29.37 percent to only 5.637 million tons. However its exports registered a healthy increase 46.47 percent as it exported 5.877 million tons of cement in 2019-20. In fact the cement exports were higher than the local consumption perhaps for the first time in history.

"The higher uptake in June has provided a hope that the new fiscal year would be better as a result of the incentives provided to the construction sector," said a spokesman of APCMA. He appreciated the reduction in excise duty on cement but has asked for complete withdrawal of excise on the commodity as excise is a punitive duty imposed to curb the use of harmful items.

Cement, he argued, is the backbone of the construction industry that this government wants to promote.

Copyright Business Recorder, 2020