May 27, 2006	Saturday	Rabi-us-Sani 28, 1427

ISLAMABAD, May 26: The government has assured cement importers of reasonable profits, it is learnt. The government sources told Dawn that the cement importers had informed the government that cement manufacturers lobby was active to restore its control on cement market by creating hurdles for importers. They informed that there were incidents when these manufacturers used their clout to influence banks to discourage cement imports, these sources said.

The cement importers feared that there was a possibility that the cement cartel flood the market with their cement at a price lower than imported cost of cement to drive importers out of the market, the sources said.

As a result, the government assured them that their fair profit in the range of Rs10-15 would be ensured at all costs and if necessary would be directed towards earthquake related reconstruction activities.

The government also assured the importers to facilitate them through state-owned banks and even through foreign banks. So far no cement import could take place although a decision was taken exactly a month ago on April 26.

This price calculation has been made on the basis of Rs60 per bag subsidy on freight charges and concession on local transportation cost through Pakistan Railways announced by the Economic Coordination Committee (ECC) of the cabinet last month.

The government had also imposed regulatory duty on cement export to discourage exports to Afghanistan and stabilise local prices.

Following the ECC decision, the cement prices have already declined to about Rs300 per 50-kg bag from about Rs380-400 per bag about two months ago.

The cement manufacturers believed that with all concessions, the imported cement could not be sold at a price lower than Rs240 per bag and they had informed the importers that they would market their local production at Rs220-230 per bag, causing losses to the importers.

The manufacturers had also offered to the government recently to stabilise cement price at around Rs285-290 per bag, provided fiscal incentives on import were withdrawn. The government, however, did not accept this offer for the time being.

These sources, however, said the government would be put in an awkward position for maintaining a higher price at a later stage in case the manufacturers really take a decision for a price crash.