ISLAMABAD: The Competition Commission of Pakistan (CCP) has released a detailed study on the cement sector, highlighting key structural issues affecting market competitiveness and pricing.
According to the report issued on Monday, cement prices have increased due to more than just supply and demand dynamics. Instead, taxation and policy gaps have played a major role in pushing prices higher.
The report noted that taxes and duties now account for up to 38% of the final cement price, meaning almost half of what consumers pay goes to levies and charges. As a result, the price of a 50kg cement bag has risen from Rs 822 to Rs 1,091.
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Despite this price escalation, the sector’s production capacity has expanded significantly. However, utilization still remains low at around 53%. Meanwhile, cement consumption has declined in both northern and southern markets.
In the southern region, a few large companies continue to dominate the market. At the same time, the report pointed out that monopoly over coal imports has increased production costs, which further adds pressure on prices.
Moreover, inconsistent transport regulations across provinces have created cost differences. Similarly, variations in mineral royalty systems have weakened fair competition across regions.
The CCP also raised concerns over smuggled and counterfeit cement entering the market. Not only does this distort competition, but it also creates serious risks for construction safety.
To address these challenges, the commission stressed the need for urgent reforms. It recommended improvements in tax policy, energy pricing, and regulatory systems. It also warned that delays in reform could push construction costs even higher and negatively affect housing and industrial growth.
In addition, the CCP proposed a comprehensive reform strategy aimed at restoring competitive balance. It called for removing market barriers and making it easier for new players to enter and expand in the sector.
Furthermore, the report emphasized the development of the mineral resources sector and suggested harmonizing axle load regulations across provinces. It also recommended modernizing the transport system to reduce logistics costs and improve efficiency.
Overall, the CCP concluded that targeted policy reforms are essential to ensure effective competition and long-term stability in the cement industry.
