Legal battle casts shadow on cement recovery

A legal battle that began nearly a year ago between the Punjab Government and the province’s cement manufacturers has reached its final stage: wait and watch. 

The dispute began when the Punjab Government decided it was going to peg the rate of royalties paid by cement manufacturers to the provincial government at 6% of ex-factory price net of sales tax and excise duty. You see when cement manufacturers extract raw materials, they also have byproducts such as limestone. These products are sold on the market, and the provincial government takes a cut. 

This year has proven to be a tough one for the cement industry. Cost for manufacturers has increased because governments in both KP and Punjab have decided to raise their royalty rates on these byproducts. KP, for example, raised their royalty from Rs 250 per tonne to Rs 350 per tonne. While this is a big jump, the Punjab government’s new formula would mean that the royalty would be somewhere between Rs 1000-1500 per tonne.