ECC not to interfere in cement industry, permits them to increase prices

ISLAMABAD: Cement industry tycoons have been given free rein by the Economic Coordination Committee (ECC) to set and increase prices, allowing them to reap additional income in the shape of billions of rupees.

According to a report in Express Tribune, the cement industry had been supported in its stance by Adviser to the Prime Minister on Commerce, Abdul Razzaq Dawood that they are allowed to freely raise its prices and suggested the ECC not interfere in its matters.

The Ministry of Industries and Production had given a presentation to the ECC regarding the demand and supply situation on the 2^nd of October 2018.

The ECC had instructed the adviser to conduct a meeting with the cement manufacturers association with an outlook to rationalizing the cement prices and provide a report with suggestions to ensure accessibility of cement in the market at decreased rates.

Following ECC directives, Mr Dawood had held a meeting with major stakeholders including officials of the All Pakistan Cement Manufacturers Association (APCMA) and other cement manufacturers on 26^th October.

During the meeting, it was observed the lion’s share of the cost of production was being provided via coal.

Subsequently due to an increase in prices of coal and rupee depreciation had an impact on the production cost and prices.

Also, it was highlighted that freight cost of the cement sector was Rs54 per bag, hence the industry was hitherto operating at a high cost of production.

The recent price increase was because of wholesalers and retailers since ex-factory prices hadn’t changed much.

Moreover, it was shared the cement industry had paid Rs111.20 billion in taxes in FY18, in which share of federal excise duty was Rs50 billion and general sales tax (GST) Rs60 billion.

According to the Ministry of Industries and Production, in spite of the high cost of production and higher taxes, the prices of cement in Pakistan were lower than those in India and Sri Lanka.

Hence, MIP recommended the government not to interfere in the cement industry and let market forces ascertain the prices.