42m tonnes annual cement production by 2010 likely

Staff Report

ISLAMABAD: The cement industry’s aggressive expansion plans would take its total production capacity to 42 million tons by 2009-2010, industry sources say.

Data available with this reporter from various cement companies reveals that the total production capacity in 2004-05 was 17, 908, 550 tons, which rose by 17% in the next fiscal to 21, 641,000 tons. The projected cement production in 2006-2007 is 33, 802, 588 tons, which would be a total increase of 36% from the last year’s production. And the year 2007-2008 will experience another capacity rise of 20% and the total capacity of the industry could reach 42, 024, 088 tons. This is an unparalleled growth plan considering any industry’s expansion.

The current dynamics and trends of the market required such commitment and all cement manufacturers have responded with plans to enhance their production capacities,” said Brig Asmat Ullah Khan Niazi (retd), Director Askari Cement.

The construction industry has had a tremendous boom and the demand for cement has also surged. The rise in the manufacturing cost of cement, ie, rise in fuel prices, and taxes, which in some cases are unique to the cement industry, had only resulted in rise of cement prices. Coupled with demand upsurges manipulation of the market by retailers further increased the prices. “In order to counter these problems, cement manufacturers have decided to enhance their production capacities so that these problems can be managed cogently”, Mr Niazi said.

He said excessive duties and taxes have also played a very important role in the cement price increase. He argued that after the hike in fuel prices, the hike in cement prices was inevitable. Cement manufactures have opted for more economical fuel by shifting to coal-fired and gas-fired furnaces with additional investments.

He claimed that the decision to import cement has been hazardous for the country. The imported cement is of substandard quality because laboratory tests have shown that the MGO in the imported cement does not fulfill the PSQA standards. Secondly, the import decision was made to control prices of cement. It is important to note here that the imported cement never hit the market in large quantities as customs authorities confiscated two shipments because of poor quality. The local cement manufacturers are responsible for averting a cement price crisis because of their increased supply in the market, he said.

The import decision, the excessive duties and taxes on cement do not help in development of the industry, Mr Niazi said. Cement manufactures have been pleading with the government to discourage import of cement because it negates the policies of the government to encourage the domestic industry. “We had urged the government to abolish excise duty, as it would have lowered the price of cement and the government would have gained in taxes because of increased consumption, but so far the government has not gone ahead”, he said.

http://www.dailytimes.com.pk/default.asp?p...16-7-2006_pg5_6