June 28, 2006	Wednesday	Jumadi-ul-Sani 1, 1427

KARACHI, June 27: The government has no plans to release substandard imported cement held by the customs authorities at the port. Around 100,000 tons of imported cement is presently awaiting customs clearance while another quantity of 200,000 tons loaded in five ships is on its way to Karachi ports from China.

Central Board of Revenue Chairman Abdullah Yousuf in a closed-door meeting with a group of business leaders at the Federation House here on Monday refused to release the held-up cement which was partly lying at the port and a larger quantity was yet to be unloaded.

Sources privy to the meeting told Dawn that the CBR chairman categorically told the business leaders to let him know as to how to solve this problem, particularly when all public sector lab reports are totally in contradiction with the reports of strength submitted by importers for the clearance of cement.

When the business leaders kept on insisting, Mr Yousuf said: “Please let me know how we do it as the matter is now so open that even the ministries of science and technology and industries are involved in this grave issue of substandard cement.”

“How could the government allow the release of this substandard cement when every 100-gram of imported cement contains 10 per cent sand that means every 50kg bag of cement carries 5kg of sand, and above all other ingredients such as insoluble residue (IR) and MGOs do not confirm with required standards of strength?” the CBR chief asked.

He said further that cement of such low quality was mostly imported by African countries where no high-rise buildings or structure were built.

Market observers believe that cement import is a multi-million rupees game, particularly when the government is giving Rs60 per 50kg bag as freight subsidy. They feel that importers are likely to earn around R200 million if the government allows release of the detained quantity of 100,000 tons cement.

In support of their argument, the observers claim that presently cement is being imported at the rate of $62 to $64 per ton C&F Karachi. The government is giving Rs60 per 50kg bag as freight subsidy, which comes to $20 per ton. The freight charges from China to Karachi also come to $20 per ton.

“This means that the entire cost of freight is being paid by the government in the form of subsidy. In other words this means that per ton cost will come down to $42 to $44. Against this, at present a 50kg cement bag is being sold at Rs300 in the domestic market as compared to Rs350 per bag in the recent past. After deducting taxes, port charges and other incidentals, per ton cost of imported cement will come to around $50,” the observers claim.

They said that from one ton cement, 20 bags of 50kg each could be made and this would mean that each bag cost would come to around Rs150, which is 100 per cent less than the present market rate. Even if the importers sell this cement at Rs200 per bag, they will earn Rs2,000 per ton or say Rs200 million from the total imported substandard cement.

“One should not be surprised if this imported cement suddenly appears in the domestic market at such a cheap price of Rs200 per 50kg bag,” the observers said but added that all depended on the government whether it could sustain the pressure or not.