Why is cement expensive? CCP report makes big revelations

The latest report by the Competition Commission of Pakistan has revealed that the high prices of cement in Pakistan are not just a result of supply and demand but are due to several deep structural and policy issues. According to the report, the share of taxes and duties in the price of cement has reached about 38 percent and almost half of the total amount paid by the consumer goes towards various taxes. This is why despite the decline in general inflation, cement has remained expensive and in a few years the price of a 50-kilogram bag has increased from Rs 822 to Rs 1091.

Another shocking fact is that the production capacity of cement has increased from 45.6 million tons to 84.6 million tons but its utilization has remained at only 53 percent which shows that the demand is weak. Surprisingly, the per capita cement consumption in Pakistan is even lower than the global average which means that there is room for growth but high prices are an obstacle in this way.

The report also highlights the risk of collusion in the cement sector. A few large companies dominate the market, new investors find it difficult to enter the sector, and competition is particularly limited in the southern regions. In addition, the monopoly of a single terminal for coal imports, different transport laws between provinces, and an inconsistent system of mineral royalties are driving up costs. Smuggled and counterfeit cement from Iran has also become a serious threat to both the local industry and consumers.

The CCP has made several recommendations for reform, including ending the monopoly on coal imports, stabilizing tax policy, setting realistic energy prices, standardizing the royalty system, cracking down on smuggling, and establishing a modern transport system. The report warns that if urgent measures are not taken, construction costs will rise further, housing projects will slow down, and industrial development may also be affected.