ECC allows cement barons to raise prices

Ministry asks govt not to intervene and let market forces determine prices

ISLAMABAD: The Economic Coordination Committee (ECC) has given a free reign to cement industry barons and allowed them to increase prices, which will provide them an additional income of billions of rupees.

Officials told The Express Tribune that Adviser to the Prime Minister on Commerce Abdul Razak Dawood had supported the cement lobby’s stance that they should be given a free hand in increasing prices and recommended the ECC not to intervene in the affairs of the industry.

A brief presentation on the demand and supply situation was given by the Ministry of Industries and Production to the ECC on October 2, 2018.

The ECC had directed that the adviser hold a meeting with the cement manufacturers association with a view to rationalising the prices of cement and submit a report with recommendations to ensure availability of cement in the market at reduced prices.

In line with the ECC directive, Dawood convened a meeting on October 26 with major stakeholders including representatives of the All Pakistan Cement Manufacturers Association (APCMA) and other cement producers. It was noted that energy was a major component of the cost of production that was being supplied through coal. So, the recent increase in prices of coal and subsequent depreciation in the rupee had an effect on the cost of production and prices.

It was also pointed out that freight cost of the cement sector was high at Rs54 per bag. Therefore, the industry was already operating at a high cost of production. It was informed that the recent price hike was due to wholesalers and retailers as ex-factory prices had not changed much.

It was informed that the cement industry paid Rs111.20 billion in taxes in financial year 2017-18 in which the share of federal excise duty was Rs50 billion while general sales tax stood at Rs60 billion. The Ministry of Industries and Production said despite the high cost of production and higher taxes, the price of cement in Pakistan was Rs579 per bag, which was lower than Rs680 and Rs657 in India and Sri Lanka, respectively.

The ministry proposed that the government should not intervene in the cement industry and let market forces determine the prices.

Published in The Express Tribune, November 16^th, 2018.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.