LAHORE: Almost all cement units, except four, face problems as the production capacity of domestic cement industry has increased by 14.5 million tons since 2006/07, while the local sales have increased by only 2.5 million tons during the period, according to a study on Saturday.
A study of the cement sector conducted by The News revealed that the sector has been adding capacities since 1995/96 when the total production of cement was 10.173 million tons with the local demand of 9.43 million tons.
The production capacity increased to 30.250 million tons by the end of 2006/07. At that time the domestic consumption was 21.03 million tons, but cement export had just started picking up and crossed 3.1 million tons during that year. The cement production capacity increased to 44.82 million tons by end of 2009/10, the study revealed.
It was found that after 2006/07, the volume of exports increased and in 2009/10 it stood at 10.6 million tons, more than three-fold increase.
The domestic consumption of the commodity reached 23.5 million tons, an addition of 2.5 million tons in three years.
In 2009/10, cement capacity of 10.6 million tons remained idle that resulted in closure of Dandot, Zeal Pak, Dadabhoy and Javedan cement factories.
It was found that only four of the remaining operative cement plants posted profits during the first nine months of the last fiscal year (results for the fourth quarter are awaited), while the remaining factories declared losses.
The study also revealed that before 2008 all the cement factories were operative and only three declared losses in 2006/07.
All the four units that declared profits are mainly cement exporters. This, however, does not imply that all cement exporting units posted profits.
Though the government announced a policy in 2009/10 to provide transport rebate of 35 percent to cement exported units situated at more that 100 kilometres away from the sea ports, but the measure was not implemented and was withdrawn during the current year. Cement sector experts are of the view that the sector could be revived if it operates on full production capacity.
They said that lowering cement rates could increase the demand. The government of Pakistan charges highest indirect taxes on cement in the world, which should be lowered, they said.
They urged the government to eliminate excise duty on cement to boost its consumption.
There is no justification of the central excise duty on cement as this duty is levied on luxurious consumption, while cement is an essential raw material for the construction industry, the experts said.
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