April 26, 2006	Wednesday	Rabi-ul-Awwal 27, 1427

KARACHI, April 25: The Central Board of Revenue is being instructed immediately to issue an SRO for providing Rs60 freight subsidy on a 50 kg bag of duty free imported cement in the country to pave the way for opening letters of credit for import of 100,000 tons of cement.

Knowledgeable sources said that Prime Minister’s Advisor on Finance Dr Salman Shah had instructed the CBR on Tuesday to issue the notification without any delay to resume import of cement and its prompt delivery to the areas where it is needed.

The government took a decision on April 14, to give a crippling blow to the powerful cartel of cement manufacturers. The Economic Coordination Committee (ECC) of the cabinet allowed duty free import of cement and also to provide Rs1,200 freight subsidy on one ton (Rs60 on a bag of 50 kg) of imported cement. But for reasons not known to business, the CBR had not issued the notification.

As the CBR was holding back the notification, the cement importers were reluctant to open letters of credit because at $65 to 70 a ton, the import was not found feasible. The importers pleaded to give them relief from Rs750 excise duty on a ton of import.

But withdrawal of the excise duty would have benefited the cement manufacturers whom the government targeted for punishment as they operated as a cartel and raised the prices at one time to Rs450 a bag in the market that torpedoed the official plans for boosting construction.

Therefore, the government on April 14 decided to offer Rs1,200 freight subsidy to the importers while retaining the excise duty of Rs750 on a ton. The government’s decision has the desired results and market prices of cement started crawling downwards.

But the holding back of the SRO on freight subsidy forced the importers to sit with their fingers crossed.

Raees Ashraf Tar Mohammad, President of the All Pakistan Grocers and Importers Association hailed the government decision to give freight subsidy on cement imports and expected a quick opening of letters of credit for the import of 100,000 tons of international standard quality cement.

In the next few days, import orders for three to four hundred thousands tons of cement may be booked. He said that cement for import was available in India, China, Philippines, Iran, Korea and other countries. He, however, urged the government to spell out in clear terms the mechanism for quick payment of freight subsidy without which the importers will not place orders.

He suggested that the finance ministry should advise State Bank of Pakistan to arrange payment of freight subsidy payment at the bank stage. Any delay in spelling out payment mechanism will defeat the government’s purpose.

Market report suggests that a ship carrying 32,000 tons of clinker is about to reach the port in a day or two. The cement manufacturers are expected to place orders for import of more clinker.

With reports of concessions on cement import, the price in local market has started crawling down to Rs350 a bag. In case an effective mechanism for quick refund of freight subsidy is set in place, the importers expect the market price to come down between Rs275 and Rs300 a bag.