KARACHI: The All Pakistan Cement Manufacturers Association (APCMA) and some exporters have criticised the Trade Development Authority of Pakistan (TDAP) for disqualifying all those plants for inland freight subsidy which are located within 100-km of the seaport.
The TDAP last Friday issued a public notice allowing the inland freight subsidy on cement exports to only those plants which are located at least 100 kilometres away from the seaport. This condition has effectively eliminated all the cement plants which are located in South to avail this benefit.
However, according to the TDAP notice, the government on the recommendation of APCMA has approved the freight subsidy on cement exports in the Trade Policy announced for 2009-10.
The notice says extra cost on inland transportation erodes export competitiveness of a range of development products. The cement sector would be offered 35 per cent of inland cost. Shipments made between issuance of public notice and June 30, 2010 would be eligible for the subsidy.
APCMA Chairman Asmat Niazi told Dawn that the decision taken by the government on freight subsidy was totally against the proposal submitted by the association. He said the cement makers in their executive committee meeting had worked out a unified rate of subsidy and it was presented to the government in writing but the public notice had disappointed the association. The association has sought a meeting with the commerce secretary to present its point of view so that this arbitrarily decision could be reverted. The association believes that the cement exporters should be given equal freight subsidy, he said.
He added that a wrong impression had been created in the public notice that freight subsidy had been approved as per recommendations of the association.
Irfan Amanullah, General Manager Finance and Coordination Attock Cement Pakistan Limited, said that around four cement makers would be affected due to non-availability of subsidy. “The share of these four plants in the southern region is four to five million tons in total cement exports of 10-11 million tons per annum,” he claimed.
He said that the company informed the TDAP on Monday that this discrimination within the sector would definitely hurt the basic objective of promoting the cement exports through sea route as this would make the cement plant of South (especially those located in areas around Karachi and at Hub in Balochistan) at a highly disadvantageous position and their competitiveness vis a vis plants of North would be adversely affected.
Cement plants located in South are exporting cement through the sea route to different regional markets because their ability to export cement through land route (Afghanistan and India) is greatly affected due to higher inland freight as compared to plants located in North.
Over the last five years, the plants of South have worked very hard in developing the markets of UAE, Qatar, Sudan, Sri Lanka, Tanzania, Djibouti, Ethiopia, Yemen, Kenya and Mauritius against stiff competition from Indian, Chinese, Thai, Egyptian and Taiwanese manufacturers.
But with this discrimination within the sector the ability of the plants located in South to reach old and new regional markets via sea route would be greatly reduced in comparison with North which would eventually affect the overall exports of cement from Pakistan.
He said unfairness within the sector would affect the level-playing field for each unit as the plants located in South will not enjoy any kind of freight subsidy if they explore the markets of Afghanistan and India via land routes which are currently under the complete control of plants located in North.
Cement is also exported in bulk and only two plants in Pakistan (located at Hub and Karachi) have the capacity to export cement in bulk, on which they have invested substantial amount. With the subsidy available for north plants only there is a risk that bulk export would suffer greatly resulting lower exports as plants located in North can only export bag cement.
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