Duty on coal import to dampen cement sectors growth

KARACHI: Chairman All Pakistan Cement Manufacturers’ Association (Apcma) Muhammad Ali Tabba has requested the government to withdraw import duty on coal as it is a direct injustice to the cement industry.

‘Coal is now the only fuel after the budget to have import duty which is a sheer injustice to the cement industry that is the predominant consumer of imported coal in Pakistan and consumes almost 95% of the 4.5 million tons imported annually,’ said Tabba.

At the same time, he added, other industries have switched to coal and many others are also converting to coal due to unavailability of gas, so this duty is to nullify the positive initiative of the government to use coal as an alternate energy source.

Chairman Apcma further said that the cement industry has spent millions of dollars in converting its plants from the expensive furnace oil to coal in order to produce cheaper cement for the consumers of Pakistan as well as making our cement prices competitive in global markets.

‘If the government imposes import duty to our main source of fuel, our competitive advantage will be significantly reduced. It is difficult to comprehend that the government is encouraging coal based power generation but on the other hand it is imposing discriminatory tax on imported coal,’ asked Tabba.

He said that while expecting further increase in capacity utilisation the cement sector is absorbing huge budget impacts already. ‘Though the tax is minimal it could prove detrimental to the future investments in alternate energy projects. The government must realize that this kind of actions is jeopardizing their initiatives of fetching investments in alternate energy projects,’ reasoned the chairman.

He added that the cement sector of the country is already facing many issues including massive load-shedding, shortage of labour, slow down of construction activities, low exports, and losses on coal imports due to no freight subsidies by the government; therefore, this duty is just to add to the woes of the sector.

‘At the time when the cement sector of the country in order to enhance its competitiveness in the global market is trying different options of reducing its fuel costs by using alternate energy resources, this imposition of duty would shy away the sector from completing this task,’ said Tabba.

This imposition of duty along with landed cost of coal, transportation cost to the up country, and increase in cost of doing business, could also result in the increase of cement prices, said the chairman Apcma, adding that this would further burden the masses in terms of increased construction costs.

It is worth adding here that different cost push increase includes axle load limitation, budgetary measures, gas and electricity tariff hike, and devaluation of Pakistani rupee. He mentioned that during the federal budget 2013-14 the cement industry was brought within the purview of ‘3rd Schedule’ and that had increased the overall tax burden.

He said given the energy crisis the government is keenly involved in creating alternate energy sources in the country, but on the other hand it is also taking such adversary measures of imposing duties on the import of coal which is beyond comprehension and would only confuse the potential investors.

He demanded that the government should remove this discriminatory anomaly and restore zero taxation on the main fuel of the cement industry.

The post Duty on coal import to dampen cement sectors growth appeared first on Pakistan Press International.

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