ISLAMABAD, June 28: The government is considering various options to bring down prices of cement. One of the options includes a regulatory duty on its export immediately.
Informed sources told Dawn on Tuesday that the government had given some time to the owners of cement factories to bring down the prices of cement at the level of June 9 to avoid what was termed “some immediate action”.
The government has told the owners that the increase in cement prices was “just unacceptable” as it would raise inflation further which is touching double digit (10 per cent).
The price of per bag cement, which was Rs259 on June 9, had been increased to Rs290 on June 23. “This is a 12 per cent increase in just two weeks and it is being taken by the government very seriously,” a source said.
However, the market price of cement is fluctuating between Rs310 and Rs330 per bag in different cities.
The other option being considered, the sources said, was to allow housing and construction builders to import cement duty free or through revised duty structure with a view to checking the prices of cement.
The government, the sources said, did not want to control the prices but was very much concerned about this sadden increase. The operating profit of cement factories, turned into cartels, has touched Rs1,200 per ton, which was the highest in the history of Pakistan and the highest in the region, they said.
The cement factories exported 1.443 million tons of cement during July-May 2004-05, which was 10 per cent of the total production. And now they are exporting 1,75,000 tons of cement every month, which has created a shortage in the local market and resulted in price hike.
“This increase has certain effect on Consumer Price Index and house rent and eventually it would increase inflation,” another source said and added that cement cartels were operating like Opec and were hurting the interest of people.
He pointed out that three new cement plants with 1.5 million tons of additional capacity would start operations from July, and in 2006-07, roughly nine million tons additional capacity will be achieved. “Then, with so much investment there will be a glut of cement and tough competition,” said the source.
However, he said the recent increase in the prices of cement did not go well with the higher authorities who every now and then received complaints of price hike across the country. The source said the people, expecting a reduction in excise duty on cement before the announcement of the new budget, did not lift cement. However, when there was no such decision taken in the budget, they hurriedly started purchasing cement. “This was also one the reasons for it’s sadden increase.”
It was alleged that the cement factories went for increasing the prices by thinking that the public sector would speed up its development activities in the month of June to exhaust their funds and in the process would not take into account the aspect of prices.
“But the government has taken a very serious notice of this new price hike,” another source said, adding that the owners would have to face tough time if they did not bring the prices down.
Our Correspondent from Sukkur adds: Industries and Production Minster Jehangir Tareen on Tuesday said the government while taking notice of price hike of cement had summoned all cement manufacturers in Islamabad on June 30.
He said that cement would be imported to cope with the price hike, and the government would not even hesitate to wave tax on it. He said that in the wake of shortage, the government was actively considering importing cement.
