In Pakistan, there are more than 25 small and large cement manufacturers operating within the country producing ordinary grey Portland, white, slag and sulphate resistant varieties of cements. This industry has an oligopolistic structure because the product is homogenous. There is a cartel in the cement sector and that regulate the production of cement in the country. The cartel restricts the quota of each manufacturer to sell in the domestic market based on its market share, which in turn is derived from the available installed capacity. After analyzing the industry it is found that no manufacturers commanding a market share over 10%. Some manufacturer are enjoying the brand equity and charging higher prices over other manufacturers. Pakistan currently has a per capita consumption of 120kg of cement, which is comparable to that for India at 135kg per capita but substantially below the World Average 270kg and the regional average of over 400kg for peers in Asia and over 600kg in the Middle East. Over the years a number of tax policy and administrative measures have been introduced to attract investment and facilitate growth of the cement industry. The Government has reduced central excise duty (CED) on cement in the budget for 2007-08 in order to boost construction activity. In Pakistan APCMA plays a significant role in projecting the cement industry to the Government and coordinating various activities in respect of formulation of Government policies for the cement industry. Cement demand is significantly affected by the Public Sector Development Program (PSDP), construction of dams, elevated and concrete roadways, residential construction as well as exports. As far as exports are concerned majority of or export heading for Afghanistan (about 95%) and the remainder towards Iraq and UAE. Deregulation after accession of Pakistan to WTO is expected to open the window of competition from cheaper markets. There may be no tariff after this deregulation on import of cement allowing its entry into Pakistan from cheaper market at lower rate. Cement from cheaper markets may also block Pakistan’s export of cement to its neighboring countries. To sum up, cement industry is among the most advanced industries in Pakistan and has integrated production facilities based on locally available raw materials. It has done continuous technological up-gradation, having acquired modern dry process technology. It has installed latest equipment for dust collection and is relatively environmental-friendly. It has recently converted furnace-oil firing to coal firing system, resulting in substantially reduced production cost.
INTRODUCTION TO CEMENT INDUSTRY
Cement industry is a major indicator of economic growth and revival of any country. This industry gives the growth and improvement of infrastructure of a country. In Pakistan, positive macro economic indicators and governments intention of spending more on social and infrastructure development has increased the demand for cement many folds. The cement industry people say that the current domestic demand leaves a surplus of 15 million tons of cement, and the country has an estimated export potential of 1.2 million tons of bulk cement per annum, as well as 600,000 tons of bagged cement and 1.2 million tons of clinker per annum. New plants are coming up in various countries and will start production in the next two to three years. Pakistan can make efforts to export three million tons per annum during the next two to three years. The cement industry, however, ruled out any dent in the domestic prices in case cement exports are enhanced in the future, executive director Lucky Cement, Abdul Razzak Thaplawala said. He added that the industry people had discussed the issue of export of cement at length with the industries secretary in the second week of January. He said that Pakistan’s cement industry is again in a state of recession as the...