KARACHI: Cement manufacturers have sought 50 per cent subsidy on the inland freight cost to boost cement export to more than $1 billion, industry sources said here on Wednesday.
All Pakistan Cement Manufacturers Association (APCMA) in a letter to the government said that the payment of $36 million as freight equalisation subsidy to the cement factories will get an additional export earning of $359 million.
Pakistan’s cement exports through sea ports in Karachi are estimated to increase from $422 million in 2008-09 to $781 million in 2009-10.
Exports to India and Afghanistan through land routes are likely to fetch more than $1 billion per annum.
The sources explained that depending on the cement units located in the North, which constitute 80 per cent of the total production capacity, inland freight cost of consignments to the port ranged from Rs900 to Rs1,400 per ton. Cement factories located in the South are paying an inland freight at an average rate of Rs300 per ton.
APCMA maintained that the high inland freight costs of the units located in the North is a major impediment in the way of raising cement exports, particularly when cement prices have gone down in the international market. The FoB cement prices have dropped in the international market from about $80 per ton to $50-56 per ton. The association has projected an increase of 36 per cent in cement exports if the government agrees to pay 50 per cent subsidy on inland freight costs.
Cement production capacity in the country has surged to 44.07 million tons per annum. With the additional capacity coming up in the North this will further increase to 46.34 million tons by 2011.
The domestic demand for cement in the country during the year 2008-09 was only 19.40 million tons. After providing for exports to Afghanistan and India by land routes the industry has a surplus exportable capacity of 13.27 million tons of cement.—APP
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