All Pakistan Cement Manufacturers Association (APCMA) has strongly urged the government to clear payments of long-awaited inland freight subsidy claims and facilitate the industry in exporting cement as local consumption is stagnant and the industry is working under capacity leaving 12.796 million tonnes of installed production capacity unutilised.
Addressing concerns: In a letter written to Ministry of Finance, Chairman APCMA, Aizaz Mansoor Sheikh, recalled that cement makers had approached the government in 2009 to allow 50 per cent inland freight subsidy for export of cement by sea to boost cement exports as high inland freight cost of the units, located in the north, makes it impossible for them to compete in the international market for export of cement by sea. Chairman APCMA added that after a lapse of six months, Economic Coordination Committee (ECC) and Trade Development Authority Pakistan (TDAP) allowed inland freight subsidy at the rate of 35 per cent for cement exports by sea only for the period from March 26, 2010 to June 30, 2010.
He said that cement industry after fulfilling all conditions, started filing claims for inland freight subsidy to TDAP and as of date, cement makers have filed claims to the tune of Rs269.293 million.
Unfortunately, he said, neither any cement maker has received claimed amount from the State Bank of Pakistan nor any intimation has been received from TDAP regarding approval of the said claims. It was also learnt that Ministry of Finance has not released any funds yet for the claims, he added.
Unutilised production capacity: Aizaz further mentioned that cement production capacity in Pakistan is 44.217 million tonnes per annum, 80 per cent of this capacity is situated in the North and 20 per cent in the South of the country. During the year 2010-2011, domestic demand for cement was a mere 22.002 million tonnes and exports were 9.419 million tonnes, thus leaving substantial production capacity unutilised, he added. He said that the reason behind allowing inland freight subsidy was to maximise cement exports via sea and facilitate the cement units located in the north zone in particular. Keeping in view the inland freight subsidy facility, the cement makers had accepted export orders on the assumption that the freight claims would be honoured, he added.
Chairman APCMA requested the Finance Secretary to intervene in the matter and issue instructions to ensure immediate clearance of long-awaited inland freight subsidy claims by the cement manufacturers. Delay in clearing legitimate claims of the cement industry is leading to colossal losses, he added.
Exports of cement: He pointed out that Pakistani cement is being exported to Afghanistan and Central Asian States at very competitive rates. However, he said, there is ample scope to increase exports through sea. Cement manufacturers could get export orders by sea, provided the issue of high inland freight cost from upcountry is addressed.
He also requested the authorities that in order to encourage exports by sea, inland freight subsidy should also be extended to the current financial year as this will not only help to bring in precious foreign exchange but also assist the cement industry to overcome its present financial crisis. APCMA spokesman feared that the loss-making mills situated in the Northern part of the country would not survive for long if they are not facilitated in increasing their exports.
Non-release of Rs7 billion fund from MoF: According to sources, despite the public announcement of various kinds of subsidies on the export of different items, the government has failed to pay billions of rupees to exporters due to non-release of funds from Ministry of Finance (MoF).
Though a large number of exporters have applied for the announced subsidies, aimed to promote the country’s exports under ‘New Trade Initiatives’ of TDAP, the authority has not paid a penny to the applicants for the last one year, sources told Profit.
As the authority is yet to receive around Rs7 billion under export development fund from MoF, it was not only unable to pay the subsidies under different heads to the exporters but also many projects like establishing warehouses and retail outlets abroad were also not being completed for lack of money, they added.
Exporters from various sectors especially from pharmaceutical and cement industry have claimed millions of rupees worth subsidy from TDAP but the authority was yet to clear the declared dues to the respective sectors.
Non-payment of subsidy: Despite the announcement of around 35 per cent of inland cost from the government, the payment of over Rs350 million was yet to be made as subsidy to the cement exporters for the last one year for unavailability of funds, they said.
The authority had earlier announced 50 per cent subsidy to leather apparel exporters for on the floor expert advisory/ consultancy services, in February last year, while 25 per cent share in the cost of design studies in tanneries, announced in November 2009. Through another category of subsidy, TDAP had also announced the 25 per cent freight subsidy on the export of live seafood, and markup subsidy for Cool Chain Projects, in October 2009. TDAP had also announced the 50 per cent sharing of cost on each Halal Certification and UL certification last year beside the 6 per cent support on the export of processed food in 2009. Besides, the authority has also announced inland freight subsidy a range of developmental products including Cement, Light Engineering, Leather garments, Furniture, Soda Ash, Hydrogen Peroxide, Caustic Soda, Sanitary Wares including Tiles, finished Marble/cut to size marble blocks/ granite/onyx products. The authority had also announced one per cent Adhoc Relief in June 2010.
