Pakistan: Cement producers have denied the existence of a cartel to Pakistan's Ministry of Industries. In a meeting with the ministry they reported that they are operating at the lowest rate of return and have passed on the bare minimum impact of inflation to consumers in the past few years.
At the meeting cement producers argued that no cartel existed in the industry because there is no uniformity in prices of cement, utilisation and market. The
price of cement per bag in Pakistan has only increased by up to 38% since 2005 despite input costs rising more than this level. Total equity of the industry is US$1.3bn and it has a 10% rate of return. In contrast, independent power producers (IPPs) are operating at 18% rate of return.
In an interview with the Express Tribune Waleed Sehgal, Director of Maple Leaf Cement Factory, cited examples of price rises in other industries that were more than cement. According to Sehgal the price of sugar had seen a peak rise of 400% since 2005, Urea a rise of 375% and di-ammonium phosphate (DAP) of 400%.
Sehgal stressed that prices of electricity, gas, coal and paper bag, labour cost and freight rate had increased manifold. "We have given the rationale behind the increase in cement prices to the Ministry of Industries," he said. He further said the industry was under debt of US$1.02bn, which it has to pay despite a low return.