The Competition Commission of Pakistan (CCP) has released a comprehensive sector study into problems faced by Pakistan’s cement industry and how rising cement prices are not the result of supply and demand but driven by high taxes and poor government policies.
According to the report, taxes and duties now account for as much as 38 percent of cement prices, meaning nearly half of the price paid by consumers consists of government levies rather than production costs.
The CCP revealed that the price of a 50-kg cement bag has increased significantly, rising from Rs. 822 to Rs. 1,091.
Despite the industry’s production capacity nearly doubling over the years, capacity utilization has dropped to just 53 percent over weak demand and operational inefficiencies. Cement consumption has declined in both northern and southern regions.
The report also pointed to market concentration concerns, particularly in southern Pakistan, where a few large companies dominate market share. Additionally, monopolistic practices in coal imports are contributing to higher production costs for manufacturers.
Regulatory inconsistencies across provinces were identified as another major issue. Different transport and axle-load regulations are creating cost imbalances, while varying mineral royalty systems are undermining fair competition within the industry.
The CCP further warned that smuggled and counterfeit cement is entering markets and posing potential safety risks to the public due to substandard construction materials.
The report termed government reforms “unavoidable,” and stressed the urgent need to overhaul tax policy, rationalize energy pricing, and modernize regulatory systems. Without immediate corrective measures, construction costs are expected to rise further, it added.
CCP has proposed a comprehensive reform strategy aimed at restoring competitive balance, removing entry barriers for new investors, and facilitating expansion within the cement sector. It also emphasized the importance of developing Pakistan’s mineral resources industry.
The CCP concluded that meaningful policy action is essential to reduce costs, improve efficiency, and ensure effective competition in Pakistan’s cement industry. It also warned that failure to implement reforms could slow economic growth and deepen the housing affordability crisis.
