Role of Cement Industry in the development of Pakistan

Engineering Post Report

Pakistan’s cement industry has continued to grow on the back of well in time  federal government initiatives irrespective of the apprehensions caused by pandemic of Covid-19.

Construction activities by the private sector  accompanied by  work at Bhasha and Dasu dams  helped in increasing  local cement consumption.

The federal government had introduced  an incentive  package for the construction industry in April 2020 which stimulated  the industry  especially  the private sector housing projects. The Incentive Package so announced included  amnesty scheme ,tax  exemption and  Rs 36 billion  subsidy for Naya Pakistan  Housing Scheme. Further, the banks  were also directed  to increase construction  sector loans  to 5 per cent of their total loan book and Federal Excise Duty (FED) reduction  on cement from Rs 2/kg to Rs 1.5 /kg have also given  impetus to this industry.

A significant increase in Foreign Direct Investment (FDI) and Long Term Financing Facility (LTFF) for construction sector also bode well for the industry. Net FDI in construction sector had  increased  by 84.5 per cent during July-April 2021 and reached the level at US $ 22.7 million. Also during July-April 2021, construction sector had availed Rs 3519 million loan  against Rs 20 million  retirement during  the same period last year.

Cement industry had posted the highest ever Year-on-Year ((Y-o-Y) growth of 44.6 per cent in July-March FY2021 due to massive increase in domestic consumption  as well as exports . Total cement dispatches stood at 5.381 metric ton t as against 3.719 metric ton t the previous year. Domestic consumption had also grown by 42 per cent to 4.563 metric ton as compared to 3.213 metric ton  in July-March FY 2020.

The export trend  represented a substantial growth  of 61.5 per cent to  0.818 metric ton  dispatches  in March FY 2021 as compared to 0.506 metric ton during the previous year.

 Domestic consumption of cement in  the northern region had  grown by 38.6 per cent in March FY2021 registering 3.809 metric ton dispatches as compared to 2.749 metric ton dispatches in the same month last year. Exports from north-based mills registered an enormous increase of 162.6 per cent  as the volumes  increased from 0.106 metric ton in March FY2020 to 0.280 metric ton in March FY2021.

Domestic consumption in the southern region had also increased by 62.3 per cent and reached to 0.753 metric ton in March 2021 as compared to 0.464 metric ton in March FY2020 while exports from the region increased by 32.5 per cent from 0.400 metric ton in March FY2020 to 0.530 metric ton in March FY2021.

 Total local dispatches  during July2020-March 2021  had increased by 18.3 percent to 36.2 metric ton  from 30.6 metric ton last year. Exports had risen to 7.1 metric ton  (10.9 per cent increase) from 6.4 metric ton  during the same period  last year. According to the All Pakistan Cement Manufacturers Association (APCMA), local dispatches  from the northern region  had increased by 17.7 per cent southern region  dispatches  had surged by 21.3 per cent during July-March FY2021. During the same period, exports from the northern region  edged by 0.2 per cent while southern region came up with  15.5 per cent  growth during the period under report here.

Cumulative dispatches, local as well as exports, on the whole had posted a growth of 17 per cent and reached to 43.325 metric ton during July-March FY2021 as compared to 37.035 metric  ton in the corresponding period previously.