KARACHI: The cost of construction has further gone up as cement makers recently increased prices by Rs5 to 10 for a 50kg bag.

The retail price of Falcon Cement (50kg bag) was quoted at Rs535-540 on Saturday as compared to Rs530-535 last week. Similarly, Lucky Cement was being sold at Rs525 from Rs520. Retailers did not mention the reasons of the price hike, but held the manufacturers responsible for pushing up rates.

Cement prices are on the rise since July last as builders introduced various mega projects.

A cement bag produced by a leading maker was priced at Rs460 in June 2013 which rose to Rs490 in July 2013 after change in the sales tax regime in the 2013-14 budget.

Local cement sales in the Northern region slightly went up to 15.5 million tonnes during July-March 2013-14 as compared to 14.9m tonnes in the same period of last fiscal year. In the Southern region, sales fell to 3.253m tonnes from 3.45m tonnes.

A cement maker said that his company had raised prices two weeks back by Rs5 for a 50kg bag but its impact was visible now.

He said those cement makers, who are dependent on power from national grid, had increased prices because of hike in power rates by Nepra whose impact comes to Rs90 per tonne. Other cement makers running on gas raised the prices due to raise in gas levy. He said that the actual maximum retail price of Falcon cement is Rs545 for a 50kg bag, but in Karachi it is sold at Rs535-540. In the interior of Sindh, it is available at Rs545. The maximum retail price, he said, is fixed keeping in view the distance while sales tax is also charged on maximum retail price.

A spokesman for All-Pakistan Cement Manufacturers Association stated earlier in April that issues impacting cement sector have still not been addressed by the government. In the previous budget, cement was brought within the purview of ‘3rd Schedule’ of Sales Tax Act 1990 that increased the overall tax burden and resulted in increase in local prices.

The industry is demanding that cement be removed from the ‘3rd schedule’ and again placed in the normal sales tax regime. This would help industry reduce prices, and it would help accelerate construction activities across the country, the spokesperson said, adding that the cost of transportation has increased substantially because of diesel rates as well as restriction on trucks to load cement and coal according to the approved axle weight.