Talking to journalists visiting the DGK Cement at Khairpur, he said that at present the most efficient cement factories in Pakistan are suffering a loss of Rs35 to Rs45 per bag and only the units with capacity to sustain the loss will survive.
General Manager Works DG Khan Cement plant Khairpur Dr. Arif Bashir said that the cement industry is facing over Rs75 billion of loans, a steep loss curve of Rs40 per bag in the local market and uncompetitive prices in the international market.
In his presentation on the cement sector of Pakistan, Dr Arif Bashir said that while the cost of production is high, owing to rising fuel and energy costs, the domestic demand of cement has dropped by 13.44 per cent in 2009. “The only saving grace for the cement industry at present was that cement exports increased by 47.4 per cent,” he added.
Bahsir said that the cement industry has invested around $6 billion in expanding its capacity from 16.72 million tons in 2002 to 41.76 million tons in 2009. The industry has contributed Rs30 billion as direct taxes to the exchequer, he added.
“Pakistan,” he said “has exported over 11 million tons in 2009, earning foreign exchange of about $750 million.”
The time to act and capture the global market is now as the cement industry of Pakistan would face tough competition in the export market when Indian, Iranian and Saudi Arabian plants would come on stream and enter the exports market.
Replying to a question about what could be the solution; Dr. Bashir suggested that the government should work out a formula in consultation with the cement manufacturers to decide the floor price allowing a margin of profit.
He also suggested that the government can also help the cement industry from closing down by giving them some relief on the high cost of fuel energy, as this constitutes 45 per cent of the over-all cost of production and if the government helps the cement industry the market demand for Pakistani Cement will reap massive foreign exchange and industrial development in Pakistan.
If the government immediately helps the industry by removing the transportation bottlenecks in the way of exports of consignments to India and to the ports of Karachi, the existing world demand, he said, shows that we can increase our exports to India and other African and Middle Eastern countries.
