MULTAN: The price of a cement bag has registered an increase of Rs100 after the market is facing ‘erratic’ supply, hampering the construction activity, Dawn has learnt.

Talking to Dawn, a contractor says the shortage of the commodity is creating hurdles for contractors doing construction on government schemes as at the initial stage, the pace of work has slowed down.

“Currently the contractors are buying the commodity at high rate to complete their schemes according to the prescribed time limit; however if the situation persists they would have no other option but to stop work,” he says.

A cement dealer alleges that manufacturers have adopted an anti-competitive method by reducing their production capacity. He says owing to limited supply from the manufacturers, the price of per bag has increased by Rs100. “The actual price of a 50-kg cement bag varies between Rs580 and Rs600 but due to the shortage the rate has reached Rs700.”

He says for a few years, the decision to increase the prices unofficially is being taken [collectively] by the cement manufacturers under the umbrella of All Pakistan Cement Manufacturers Association and as per ‘plan’ they allegedly start reducing production or supply to dealers.

“The same practice was exercised in April 2020 when the leading cement factories had collectively decided to increase the price of a cement bag by Rs55 despite the fact that the production capacity of the sector had increased to 69 million tonne in 2020 against 44 million tonne in 2014. Although an inquiry was initiated by the Competition Commission of Pakistan, no one is aware of its outcome,” he says.

The dealer says neither any of the ingredients used to manufacture the cement is being imported nor has there been any raise in dollar value against Pakistani currency for the last few months so there is no justification to increase the price suddenly itself by the cement manufacturers.

“Recently, the All Pakistan Cement Manufacturers Association claimed that the production capacity of the country will reach 99 million tonne per year till 2023. On one hand, they are claiming that the production capacity is increasing with the passage of every day and on the other hand the country is facing shortage of the commodity after some months which is nothing else but the incompetence of the government,” he says.

It merits mentioning that the manufacturers recorded 38 million tonne sale of the cement during the eight month period ending in February 2021 which was 14 per cent higher as compared to the previous year.

Published in Dawn, May 26th, 2021