Construction Boom Sets New Record For Cement Sales in Pakistan

Domestic cement sales are up 9% year-over-year for the first 7 months of Pakistan's Fiscal 2014-15, according to media reports.  Overall, cement industry reports cement shipment of over 20 million tons in 7 months, a 6% annual increase with rising domestic demand offsetting falling exports due to weakness abroad.

Market capitalization of  Pakistani cement companies has jumped 70% last year, about 3 times more than the KSE-100 market index which rose 27% in 2014. This is the third consecutive year that cement companies have outperformed the broader market. Investors in Pakistan's cement sector have seen 600% rise in the last three years.

It appears that construction  sector is getting a boost from falling inflation and declining interest rates with a big drop in world oil prices. Domestic sales of 2.5 million tons a month translate to about 160 Kg per capita consumption of cement, the highest level in Pakistan's history.

Pakistan saw its domestic cement consumption double from about 11 million tons in 2003 to 22 million tons in 2008 on President Musharraf's watch. It remained essentially flat from 2009 through 2011 before rising to a new high of 24 million tons in 2012. With expected GDP annual growth to average 4.5-5.5 per cent over the next 3 years, local cement sales could rise by 9 per cent on average annually to reach 34 million tons per year by 2017 and exports to 8 million tons per year.

Cement sales and building activity indicators are an important sign of the strength or weakness of the broader economy, due to construction's important role in the economic sector. If individuals and businesses are willing to invest in new construction, it is a sign that the economy is doing well or poised to recover. If they aren't, the economy may be weak or headed for trouble. Construction is a very labor-intensive activity which creates many new jobs. Higher employment drives consumer spending which further stimulates the national economy.

In addition to rising demand for housing and new commercial real-estate, major infrastructure and energy projects related to the China-Pakistan Industrial Corridor are expected to significantly boost domestic cement consumption and create millions of new jobs over the next several years.

Related Links:

Haq's Musings

State Bank: Pakistan's Actual GDP Higher Than Official Figures

Investors Bullish on Pakistan Cement Sector

Pakistan Ranks in the Middle For Infrastructure and Logistics

China-Pakistan Industrial Corridor

India Fudging GDP to Claim Faster Growth Than China?

India-Pakistan Economic Comparison 2014


Riaz Haq said…
The State Bank of Pakistan (SBP) submitted its first quarterly report of fiscal year 2014-15 (FY15) titled “The State of Pakistan’s Economy” to parliament on Tuesday.
The report says that Pakistan’s economy faced several challenges in the initial months of FY15 as the fourth review of the Extended Fund Facility (EFF) could not be finalised in early-August meetings with the International Monetary Fund (IMF).
The report also refers to political events in mid-August in Islamabad that impacted economic activity in the country. In September, floods inundated a large part of agriculture land in Punjab. It was feared these losses may push the price of perishable food items up, which fuelled inflationary expectations.
“Against this backdrop, key macroeconomic indicators could not follow up positive developments observed in the second half of FY14,” says the report. “1QFY15 saw higher deficits in the current and fiscal accounts, which had to be financed via domestic resources.”
However, there has been a marked improvement in the economy during the second quarter of FY15, which is likely to persist through the rest of the year.
Highlighting developments in the external sector during 1QFY15, the report says, “Overall trade deficit increased by $1.6 billion in 1QFY15, compared to the same period last year.” This increase was partly compensated by a $765 million increase in home remittances during the quarter.
The report avers that the rising current account deficit, coupled with the uncertainty in the foreign exchange market, was one of the key factors that guided the SBP’s decision to keep the monetary policy tight during July to September 2014.
Government borrowings remained lower during 1QFY15 compared to last year because loans were taken from other sources like PIBs and National Savings Schemes. “Within the banking system, instead of borrowing from the central bank, the government borrowed from commercial banks, which also remained lower than the same period last year.”
The industrial sector is presenting a mixed picture. “Higher cement dispatches, steel imports and strong PSDP spending suggest a pick-up in construction activity in 1QFY15,” said the report.
“In contrast, LSM (large-scale manufacturing) growth showed a decline, as local manufacturers faced gas shortages (especially in fertiliser, textile, paper, glass and leather sectors).
Furthermore, textiles also remained dull on account of lower demand for yarn and fabric from China and Bangladesh. The fall-out of a weak commodity-producing sector can also be seen in wholesale and retail trade activity. However, the vibrancy in finance and insurance, and telecommunications, appears to have provided services a boost this year.
While discussing the outlook on the economy, the report maintains that the external sector would benefit the most from the decline in oil prices, as petroleum directly makes up nearly 35% of the import bill. Inflation is also likely to end up much lower than initial expectations, as the government has steadily been reducing retail petroleum product prices in line with international rates.
Riaz Haq said…
From Wall Street Journal: "Pakistan Close to Agreement With Qatar Over LNG Supplies for Power Plants"

ISLAMABAD—Pakistan is close to striking a long-term deal worth potentially $22.5 billion or more to import liquefied natural gas to help fuel the country’s power stations and ease its crippling electricity crisis, Pakistan’s top energy official said.

“We are negotiating with Qatar and a few other sources,” said Pakistani Petroleum Minister Shahid Khaqan Abbasi in an interview with The Wall Street Journal. “The deal will be very competitive and very beneficial for Pakistan.”

An agreement with Qatar is expected by early March, Pakistani officials say.


The deal with Qatar would provide supplies over 15 years, Pakistani officials say. Pakistan is looking to import 3 million tons of LNG a year, beginning this year, with much or all of that coming from Qatar.

The country’s overall LNG imports are expected to rise to around 7 million tons annually within three years. It isn’t clear as yet how much of that higher total would be provided by Qatar.

Importing 3 million tons of LNG would cost around $1.5 billion annually, or some $22.5 billion over 15 years, given current global oil and gas prices, analysts say. That cost will fluctuate with the price of oil, which is also used to price LNG.

The Pakistani conglomerate Engro has built a terminal to import LNG at Port Qasim, on the edge of the southern city of Karachi, set to become operational at the end of March, officials say. Bidding is now under way to construct a second LNG terminal at Port Qasim.

Pakistani officials have been negotiating for months with state-owned Qatar Gas. The government of Qatar and Qatar Gas didn’t respond to requests for comment.

Pakistan’s electricity crisis has been caused partly by its reliance on importing furnace oil and diesel to fire its power stations, both relatively expensive fuels that will be replaced by the LNG. “LNG is more efficient and cleaner for the environment than the alternatives,” Mr. Abbasi said. “This is a major shift in our energy mix.”

According to Mr. Abbasi, LNG imports of 3 million tons would yield cost savings worth an annual $300 million. By using LNG, Pakistan will be able to between 7% and 9% more power, as a result of its greater efficiency and by bringing currently dormant gas-fired power stations back to work, Mr. Abbasi said.

Pakistan’s electricity shortage results from a failure to build power stations to keep pace with demand, a dependence on burning relatively expensive fuels and the swelling of debt in the sector that has led to some plants being shut down.

The deal would mark the first time that Pakistan will import natural gas. It would be the biggest financial commitment made by Pakistan to date, analysts say.

“This would be a positive development for Pakistan’s energy security. Qatar is a reliable and credible supplier,” said Anthony Livanios, head of oil and gas consultancy Energy Stream CMG. “For Qatar, this will help it diversify its customer base. So it’s a win-win situation for both countries.”

Qatar is the world’s biggest producer and exporter of LNG.

Pakistan is also considering shorter-term deals and open-market transactions to source some of its LNG needs from other countries, including Brunei, Malaysia and China, which isn’t a producer but may have excess imports that it can resell.

Nicholas Browne, a senior manager at Wood Mackenzie, an oil and gas consultancy, said typical pricing for Qatari LNG would be 14% to 15% of the price of oil. At 14%, Pakistan would be acquiring the fuel at $7 per million BTU, an attractive price, said Mr. Browne.

“From a buyer’s perspective, it is a great time to be in the market for LNG, in terms of both price and availability,” said Mr. Browne, because the price of oil has fallen and there is a substantial increase in supply expected in the next couple of years, as Australia and the U.S. bring new output onto the market.
Riaz Haq said…
From IHS Jane's 360:

Chinese foreign minister Wang Yi reiterated calls for the implementation of the China-Pakistan Economic Corridor (CPEC) to be expedited during his two-day visit to Pakistan on 12 February.

As part of China's wider plans to increase connectivity in Asia, the CPEC is planned to connect Gwadar port in Pakistan's Balochistan province to Kashgar in China's western Xinjiang province through road infrastructure, railways, and oil and gas pipelines. In November 2014, the Chinese government committed to investing USD45.6 billion until 2020 for the various projects included under the CPEC, of which USD15 billion will be spent on renewable energy projects to alleviate Pakistan's energy shortages.

However, the CPEC's route has been the subject of intense domestic debate in Pakistan over the past month, resulting in two walk-outs from parliament. The Khyber Pakhtunkhwa and Balochistan provincial governments have accused the Pakistan Muslim League - Nawaz (PML-N) federal government, which draws its support primarily from Punjab, of altering the CPEC's road transportation route away from the two comparatively underdeveloped provinces. The PML-N government on the other hand argues that it plans to use the existing road network in Punjab and Sindh on an interim basis while the route through Khyber Pakhtunkhwa and Balochistan is developed, which could take as many four years according to current government estimates.

While the intensity of debate indicates the CPEC's likely initiation, the possibility of losing the broader development that it represents underpins the risk of protests and riots in Khyber Pakhtunkhwa and Balochistan in at least the three-month outlook. Already in Quetta, Balochistan's provincial capital, traders went on general strike backed by local political parties on 13 February. Protests are likely to remain relatively peaceful and cause less than 24 hours of disruption, unless a major political party intensifies its opposition. The most likely is Imran Khan's Pakistan Tehreek-e-Insaf (PTI), which heads the Khyber Pakhtunkhwa government. The party has already launched two major protest movements, including a four-month anti-government sit-in that ended in December 2014 as well as a cargo blockade in Khyber Pakhtunkhwa from November 2013 to February 2014.
Riaz Haq said…
Billionaire Mian Muhammad Mansha’s D.G. Khan Cement Ltd., Pakistan’s third-largest maker of the construction material, plans to build an $300 million plant near Karachi as economic growth boosts demand.
“There will be a shortage domestically in three years if there is 10 percent growth in demand each year,” Chief Financial Officer Inayat Ullah Niazi said in an interview at the company’s headquarters in Lahore on Thursday. The company’s two cement plants have operated near full capacity in the past two years.
The company is building its first plant since 2007 to tap economic growth that Prime Minister Nawaz Sharif’s government forecasts will be the fastest in seven years, even as the nation grapples with an electricity supply crisis and terrorism. Pakistan’s output is projected to expand 4.3 percent in the year ending June 30 and 4.75 percent in the following fiscal year by the International Monetary Fund.
The new plant near Hub, a city west of Karachi, will produce about 2 to 2.5 million tons of cement a year, Niazi said. Construction is targeted for completion late in 2018. The plant will be financed 40 percent through internal cash and the rest through debt, Niazi said.
“Expansion means the company will enter the southern region of the country,” Tahir Abbas, an analyst at brokerage Arif Habib Ltd. said by phone in Karachi. “This will impact the entire industry and could start a price war.”
Earnings Forecast
D.G Khan shares rose 2.9 percent to 128.63 rupees in Karachi Thursday. The stock has gained 48 percent over the last year, compared with a 32 percent gain in the benchmark KSE100 Index.
Cement sales in Pakistan rose to a record 34.3 million tons in the year ended June 30, 2014, according to the cement manufacturers’ association. Sales are on track for another record this year.
D.G. Khan is spending $30 million to generate electricity from coal to run its plant in Punjab province to decrease reliance on natural gas. South Asia’s second-biggest economy is struggling to meet gas demand and plans to import liquified natural gas.
The company forecasts net income will rise 25 percent to rise to 7.5 billion rupees ($74 million) in the year ending June 30, Niazi said. Domestic sales with higher margins than exports will contribute to the projected gain. Net income was a record 5.99 billion rupees in the last fiscal year.
Riaz Haq said…
The Pakistani government expects to raise about $600 million next month selling a stake in Habib Bank Ltd., the nation’s biggest lender by assets, before undertaking deals for electricity distribution companies and Pakistan International Airlines Corp.
The government owns 609 million shares of Habib Bank, or a 42 percent stake, and it will offer a minimum of 250 million shares, Privatization Commission Chairman Mohammad Zubair said in an interview in London on Friday.
“People are taking much more interest because the government is coming up with transactions every two months,” Zubair said.
Prime Minister Nawaz Sharif aims to raise $2 billion from asset sales in the year ending June 30 to meet conditions attached to a $6.6 billion International Monetary Fund loan. He wants to curb his budget deficit and bring greater efficiency to state-owned companies.
Habib Bank shares fell 0.2 percent to 205.05 rupees in Karachi on Feb. 20. The stock has gained 40 percent in the past year, compared with the 33 percent advance in the Karachi Stock Exchange 100 index.
A decision on the discount the shares will be offered at won’t be taken until just before the actual sale in late March, Zubair said. Pakistan sold a stake in United Bank Ltd. last June at a 7 percent discount and shares in Allied Bank Ltd. in December at a 3 percent discount, Zubair said.
Electricity Distribution
His focus then will turn to selling the first of nine state-owned power distribution companies. Zubair said he aims to invite bids for the electric supply company in the city of Faisalabad within about six weeks, with a goal of completing the deal by the end of September.
“There are buyers out there,” Zubair said. Pakistani and Chinese companies are among those who have expressed interest, he said. The appeal of the companies is “clear. There is known demand, and it is growing. The challenge is to collect revenue,” he said.
The intention is to complete the sales of all nine distribution companies by June 2016, Zubair said.
“We believe that unless you take them all together, it would be difficult to complete the process,” he said. Financial advisers already have been appointed for the first four of the companies.
The government also will seek to complete the sale of a stake in Pakistan International Airlines Corp. by March 2016, Zubair said. The transaction will focus only on the “core” airline unit, with other operations such as ground-handling and catering being kept by the state, he said.
The asset sale program experienced a setback when political turmoil and falling oil prices prompted the government to suspend its sale of shares in Oil & Gas Development Co. Ltd. in November. A month later, the government sold an 11.4 percent stake in Allied Bank for $144 million.
“We are well on track to achieve the $2 billion” target for this fiscal year, Zubair said. “When we were given it, we thought it was conservative. Now, it looks much more challenging because a number of transactions got delayed. We expect to achieve it.”
To contact the reporters on this story: Khurrum Anis in Karachi at; Guy Collins in London at
To contact the editors responsible for this story: Arijit Ghosh at Dick Schumacher
Riaz Haq said…
The federal cabinet of Pakistan, during a meeting Monday, approved the Pakistan-China economic corridor, a media report said. Approval was also given along for starting negotiations with Beijing for importing 1,000 megawatts of electricity from China by laying a new transmission line, Dawn online reported. The Pakistan-China Economic Corridor (PCEC) is the country's biggest road project launched by the government. Work on one of the sections of the PCEC was initiated in December 2014, under which a motorway from Havelian to Thakot as phase one of the Islamabad-Raikot section of the corridor would be constructed. The Havalian to Thakot section of the corridor is being financed by China while other phases will be carried out on the basis of build, operate and Transfer (BOT).
Riaz Haq said…
From Wall Street Journal: Pakistan’s Economic Management Gets Thumbs Up From IMF

Pakistan’s economy has improved, thanks to prudent monetary and fiscal policies, strong capital inflows, robust remittances from abroad and lower oil prices, the International Monetary Fund said on Wednesday.

“The authorities have made progress with consolidating macroeconomic stability, strengthening public finances and rebuilding foreign-exchange buffers,” Masood Ahmed, director of the IMF’s Middle East and Central Asia department, said in a statement following a recent visit to Islamabad and Lahore.

As a result, economic growth is strengthening and inflation is slowing, he added.

Pakistan’s central bank slashed its key interest rate in January by a full percentage point, to 8.5%, citing a slowdown in inflation, among other factors, amid plummeting oil prices and declining global prices for other commodities. January’s interest-rate cut came after a half-percentage point easing in November.

Mr. Ahmed called on Pakistan’s government to further bolster revenue by broadening the tax base and improving compliance, which would allow it to further reduce public debt while increasing spending in key areas such as health and education.

The Pakistani government should also “reinforce and build on recent stability gains to work towards achieving higher, sustainable and inclusive economic growth.”

Priorities for the government should include addressing longstanding imbalances in the energy sector, restructuring and privatizing public-sector enterprises, proceeding with investment-climate and trade reforms as well as continuing with financial-sector reforms, the IMF official noted.
Riaz Haq said…
Bombs, Protests and Blackouts Fail to Cripple Pakistan Economy

Lower oil prices, higher remittances and increased consumer spending are pushing (Pakistan economic growth) growth toward a seven-year high. Corporate earnings are soaring, stocks have surged and the currency is among the world’s top performers.
The steady economic upturn as growth prospects weaken in many emerging markets has underpinned Sharif’s political support, with his party gaining in a Senate election held this month. While much more needs to be done to fix an economy dependent on financing from the International Monetary Fund, the perception of Pakistan is starting to change.
“Sharif’s government has improved things with the help of the IMF,” Sayem Ali, head of investments strategy and advisory at Standard Chartered Plc’s Karachi unit, said by phone. “They have put Pakistan back on the radar in terms of international investors.”
When Sharif took power in May 2013, he faced a balance-of-payments crisis that forced him to seek help from the IMF. Foreign exchange reserves have doubled in the past year to $16 billion, the budget deficit has narrowed and inflation is easing as global oil prices fall.
Pakistan last month said it regained its eligibility to borrow from the International Bank for Reconstruction and Development, making it eligible for $2 billion of credit over the next four years. The IMF also is optimistic it will meet the conditions of the $6.6 billion loan it received two years ago.
‘Good Foundation’
“I see Pakistan breaking with past precedent of failed IMF programs and half-completed reforms, which set the stage for a crisis,” Jeffrey Franks said last month, when he was IMF mission chief. The country has a “good foundation” for further growth, a delegation led by his successor said on March 9.
The IMF forecasts Pakistan’s economy to expand 4.3 percent this year, compared with the five-year average of 3.6 percent. Pakistan’s moves to bolster its public finances are credit positive, Moody’s Investors Service said in a report on Monday.
“It is striking that reforms have continued despite disruptive domestic political challenges over the last year, and heightened security threats from Islamist terrorism,” Moody’s analysts wrote.
Pakistan’s middle class more than doubled to 84 million in 2002-2011, according to a study by Jawaid Abdul Ghani, a professor at the Karachi School for Business and Leadership. That’s brought almost half the nation into that segment for the first time, boosting profits at Nestle Pakistan Ltd. and Lucky Cement Ltd. to record levels.
Stocks Surge
Sharif is aiming to raise $2 billion from asset sales in the year ending June 30 to meet conditions attached to the IMF loan. Up for grabs in the next few years are stakes in Habib Bank Ltd., the nation’s biggest lender by assets, and Pakistan International Airlines Corp., the national carrier.
The benchmark KSE100 stock index has rallied 63 percent since Sharif took office, the sixth-best performance among 93 world gauges tracked by Bloomberg. Over the past six months, Pakistan’s rupee has outperformed every major global currency.
“The private sector is coming into play,” said Nadeem Siddiqui, Pakistan head at the International Finance Corp. “But the main problem will not be solved overnight.”
Riaz Haq said…
Pakistan cut its benchmark interest rate to the lowest in almost 13 years as a decline in global oil prices helped slow inflation in a nation wracked by political protests and terrorism.

State Bank of Pakistan Governor Ashraf Mahmood Wathra reduced the discount rate for a third straight month to 8 percent from 8.5 percent, the central bank said on its website on Saturday. Nine of 11 economists in a Bloomberg survey predicted the reduction, two estimated the rate being cut to 7.5 percent.

The lowest borrowing cost since December 2002 will help Prime Minister Nawaz Sharif encourage companies to expand in the nation that’s recovering from the worst fuel shortage in recent memory and a school massacre that killed 152 people most of them children. Consumer prices last month rose at the slowest pace since Bloomberg started compiling data in 2009.
“The decision will help improve consumer confidence and we will see private sector borrowing rising,” Yawar-uz-Zaman, vice president at Shajar Capital Pvt. in Karachi said by phone. “We forecast another 50 to 100 basis point reduction as inflation slows.”

When Sharif took power in May 2013, he faced a balance-of-payments crisis that forced him to seek help from the International Monetary Fund. Foreign exchange reserves have doubled in the past year to $16 billion, the budget deficit has narrowed and inflation eased to 3.24 percent in February.
Pakistan’s benchmark stock index has risen more than 60 percent in the period. The IMF forecasts Pakistan’s economy to expand 4.3 percent this year, compared with the five-year average of 3.6 percent.
Political Protests
“Owing to recent foreign exchange inflows and lower oil prices, external sector outflows continue to improve,” the central bank said in the statement. “The trend moderation in inflation is broad-based with food and non-food inflations receding.”
Political protests last year to oust Sharif threatened to disrupt an economic overhaul. The slaughter of 134 students in December underscored the ongoing risk from Taliban militants, part of an insurgency that has killed more than 50,000 people since 2001.
Sharif canceled a trip to the World Economic Forum in Davos in January as fuel shortages left motorists stranded across the country. Shortly afterward, a terrorist attack triggered a blackout that left 80 percent of the country without power.
Riaz Haq said…
Moody’s Raises #Pakistan Outlook as Economy Improves Under #PMLN #NawazSharif via Kyrgyzstan Business Information​
Pakistan’s credit rating outlook was raised to positive from stable by Moody’s Investors Service, signaling an upgrade is possible for the first time since 2006 as the economy steadily improves.
The new outlook “is based on a strengthening external liquidity position, continued efforts toward fiscal consolidation, and the government’s steady progress in achieving structural reforms under the IMF program,” Moody’s analyst Anushka Shah said in a statement on Thursday.
The company maintained its non-investment-grade Caa1 foreign currency rating and said implementation of more reforms, successful completion of the International Monetary Fund program or better finances could trigger an upgrade.
Prime Minister Nawaz Sharif is using lower oil prices, higher remittances and more consumer spending to push growth toward a seven-year high. Even so, a large budget deficit, high debt costs and dependence on external funding leaves Pakistan vulnerable to political and economic risks, Moody’s said.
When Sharif took power in May 2013, he won a $6.6 billion loan from the IMF to avert a balance-of-payments crisis. Since then, the country has cleared six program reviews and has also regained eligibility to borrow from the International Bank for Reconstruction and Development.
“Fundamentals of the country are improving,” Hedi Ben Mlouka, chief executive officer at hedge fund Duet Mena Ltd., said in a March 18 phone interview from Dubai. Even a “marginal improvement will make a very big difference and make it an attractive investor destination.”
The benchmark KSE100 stock index has rallied 56 percent since Sharif took office, and the rupee has outperformed every major global currency over the past six months.
Foreign exchange reserves have doubled in the past year to $16 billion and the IMF forecasts Pakistan’s economy to expand 4.3 percent this year, compared with the five-year average of 3.6 percent.
The nation’s central bank last week cut its benchmark interest rate to the lowest in almost 13 years as lower oil prices slowed inflation.
Riaz Haq said…
Ambassador of Pakistan to Afghanistan Syed Abrar Hussain on Monday said that Pakistan had planned to construct a motorway from Peshawar to Kabul and a feasibility study about the project would soon be commissioned.

Ambassador expressed these views after hoisting National flag on the occasion of National Day at the Pakistan embassy in Kabul. He said that the motorway project will not only improve connectivity between the two neighbours and Central Asian States but would also bring economic prosperity to Afghanistan, said a press release.

He also underscored the need for intensifying bilateral cooperation between the two countries in the areas of trade, economy, culture and defence. He said that Pakistan attached utmost significance to its ties with the brotherly country and would like to see a strong, stable, peaceful and prosperous Afghanistan.

Talking to efforts to enhance trade with Afghanistan, the ambassador said that Pakistan had removed several trade impediments so as to facilitate and encourage bilateral trade. He stated that Pakistan had executed various projects in health, education and infrastructure sectors in Afghanistan which would tremendously benefit the Afghan people.

Pakistan day was celebrated in the Embassy of Pakistan, Kabul, with great enthusiasm and national fervor to commemorate the passage of historical Lahore Resolution on March 23, 1940 which played a vital role in determing the destination of the Muslims of sub-continent. The Pakistan Day ceremony started with national anthem and hoisting of flag by the Ambassador.

Addressing the participants, he highlighted the historical significance of the day and paid tributes to the founding fathers who had rendered immense sacrifices for achieving a separate homeland. He said that the Pakistan's Resolution of 23rd March 1940 laid the foundation stone of an independent country.

He also paid homage, in his address, to the Father of Nation, Quaid-e-Azam Muhammad Ali Jinnah, whose relentless struggle led to the creation of Pakistan on August 14, 1947. The ceremony was attended by members of Pakistani community including educationists, engineers, doctors, senior executives and businessmen.
Riaz Haq said…
Last year, the world produced 3.6 billion tons of cement—the mineral mixture that solidifies into concrete when added to water, sand and other materials—and that amount could increase by a billion tons by 2050. Globally, the only substance people use more of than concrete, in total volume, is water.

Cement’s virtues, Vlasopoulos says, have long been plain: It is inexpensive, pourable and, somewhat inexplicably, becomes hard as a rock. But one other important detail is seldom acknowledged: Cement is dirty. Not dirty as in it won’t come off your clothes—although that problem has dogged construction workers for centuries. The key ingredient is limestone, mostly calcium carbonate, the remains of shelled marine creatures. The recipe for making cement calls for heating the limestone, which requires fossil fuels. And when heated, limestone sends carbon dioxide gas wafting into the atmosphere, where it traps heat, contributing to global warming. Cement production is responsible for 5 percent of the world’s human-produced carbon dioxide emissions; in the United States, only fossil fuel consumption (for transportation, electricity, chemical manufacturing and other uses) and the iron and steel industry release more of the greenhouse gas. And with booming countries such as China and India using cement to construct their rise, cement’s dirtiness looms as one of the foremost downsides of globalization.
People have been trying to build a better cement since just about the beginning of history. More than 2,000 years ago, the Romans devised a mixture of lime, volcanic ash and chunks of stone to form concrete, which was used to make harbors, monuments and buildings—the glue of early cities—including the Pantheon and the Colosseum. In the 1820s, in Leeds, England, about 200 miles from Imperial College, a stone mason named Joseph Aspdin invented modern cement. Aspdin heated a concoction of finely ground limestone and clay in his kitchen. After he added water, the mixture hardened. Voilà—the building block of the Industrial Revolution was born. Because the material looked like a popular building stone from the Isle of Portland, Aspdin called his invention Portland cement. The patent, issued in 1824, was for “an improvement in the mode of producing an artificial stone.”

The Australian developers had tried a new recipe, mixing Portland cement with magnesium oxide. They hoped to reduce carbon emissions because magnesium oxide can take the place of some of the limestone, and magnesium oxide does not have to be heated at such a high temperature. Limestone must be heated to 2,600 degrees Fahrenheit, but magnesium oxide can be prepared for cement at 1,300 degrees, a temperature that can be attained with biomass and other fuels that release less carbon, cutting down on fossil fuel consumption.

But Vlasopoulos quickly discovered that the blend did not reduce overall carbon dioxide emissions. In some tests, the emissions nearly doubled, because magnesium oxide itself is produced by heating magnesium carbonates, a process that releases carbon dioxide.

“I remember feeling very disappointed because when you see that the project you’re working on is not actually what you thought it was going to be, you lose motivation,” he said. “But we felt it was a very worthwhile project, a worthwhile idea, so we tried to find another way to solve the problem.”

At the time Vlasopoulos took up the question, in 2004, big cement firms around the world were looking for new ways to make Portland cement more environmentally palatable. The producers added steel byproducts, such as slag; coal residues, such as fly ash; and other materials, such as magnesium oxide, to bulk up the cement mixture, requiring less Portland cement. They experimented with mineral additives to reduce the temperatures needed to prepare the materials.

Read more:
Riaz Haq said…
#Pakistan first REIT (real estate investment trust) set for $55 million IPO at Karachi's KSE market$55m-ipo

Bookbuilding kicked off for Pakistan and south Asia’s first real estate investment trust (Reit) on June 8, as the long-awaited Dolmen City Reit’s Prp5.56bn ($54.55m), listing on the Karachi Stock Exchange, blazes a path for the asset class.

The shariah-compliant Reit, which has whet local investors’ appetite since plans were made for it earlier this year, is selling 555.93m units, or 25% of its total fund size, to institutional and retail investors. The former are allowed to bid for 416.94m units, or 75% of the ...

Pakistan’s first Real Estate Investment Trust has been launched at Karachi Stock Exchange, which is a joint venture between Arif Habib Dolmen REIT Management Limited, Arif Habib Group and the Dolmen Group.

The properties will generate rental income that will be distributed by the REIT Scheme among unit holders in the shape of dividends. Any possible appreciation in the value of the property will be an added benefit. Syed Murad Ali Shah, Advisor to Chief Minister for Finance, the Chief Guest at the event rang the Gong and said, “The launch of Dolmen City REIT is a matter of great pride for all of us, as this is not just Pakistan’s first REIT scheme but also the Subcontinents’.

I congratulate Arif Habib Dolmen REIT Management Limited and the Karachi Stock Exchange on this monumental accomplishment. A REIT is modeled after mutual funds and provides investors with regular income streams, diversification and long-term capital appreciation. I expect an enthusiastic participation from investors during the Book Building which is on the 8th and 9th of June and also from the General Public who can participate in the IPO on the 12th of June.”
Riaz Haq said…
Investors snap up #Pakistan's first real-estate investment trust (Dolman City #REIT); Will boost #Karachi real estate

Investors piled into Pakistan’s first real-estate investment trust, which was launched this week with a public offer that was heavily over-subscribed, the REIT’s lead manager and analysts said on Thursday.

The Dolmen City REIT offered investors a 25% stake in a 22.24 billion rupee ($218.5 million) shopping mall and an office complex at Dolmen City, one of the most prominent real estate developments in Karachi, Pakistan’s largest city and its economic hub. The Arabian Sea-front project includes three other structures not included in the REIT.

Traders and the REIT’s main advisor said the initial offer for 75% of the trust to institutional investors and high net-worth individuals through bookbuilding on Monday and Tuesday drew demand of more than 7 billion rupees for an offering of shares worth 4.17 billion rupees at a floor price of 10 Pakistani rupees ($0.10). At the strike price, the initial offer raised 4.59 billion rupees, according to the REIT’s lead manager.

The remaining 25% of the stake was to be offered to the public on Friday at a strike price of 11 rupees ($0.11). Analysts and the REIT’s management expected the Friday offering to be fully subscribed as well, raising another 1.53 billion rupees.

“The interest rate is at a 42-year low, with the discount rate at 7%, so for people who invest in fixed-income instruments, REITs are attractive,” said Muhammad Tahir Saeed, deputy head of research at Topline Securities, a Karachi-based brokerage.

Pakistan’s economy has improved in recent years, despite political turmoil, major security challenges, and chronic electricity shortages that have hobbled industry. The country’s main stock market in Karachi has gained 72% since the 2013 election and the country’s improving prospects are increasingly being recognized internationally. Prime Minister Nawaz Sharif’s government has said boosting investment is one of its key economic objectives.

With both buildings in the Dolmen City REIT fully occupied, it is expected to yield 9.5% in the first year, with a 10% increase every year based on escalation clauses in tenancy agreements. The development is located next to two of Karachi’s most affluent residential areas.

The Dolmen Mall Clifton, Pakistan’s largest shopping mall, currently has an occupancy rate of over 90%, according to a fact sheet provided by the REIT management. The mall has 130 stores, including foreign outlets such as Debenhams DEB.LN -1.13%, and a multi-level department store.

The neighboring Harbour Front office complex is currently fully occupied, with several high-profile tenants like Procter & Gamble and Engro, one of Pakistan’s largest corporations.

Pakistan’s commercial property sector was described in a first-quarter report this year by Lamudi Pakistan, an online real estate portal, as “almost at a standstill”. But analysts said investors in Pakistan are still keen on real estate as a long-term asset, particularly in properties such as Dolmen City’s Harbour Front with high-profile corporate tenants.

“In the long term there are significant opportunities as prices are low, meaning potential yields are high, and there is considerable room to expand and modernize Pakistan’s stock of commercial real estate,” BMI Research said in a report on the country’s real estate sector earlier this year.

Analysts said the success of the Dolmen City REIT could boost interest in the instrument.

“People were looking at Dolmen and expecting that, if it succeeds, many REITs will be launched in the coming years [in Pakistan],” said Saeed of Topline Securities. “I can foresee some groups [developing shopping malls] jumping into this asset class.”
Riaz Haq said…
Pakistan’s consumption up 8%, but exports fall
While Pakistan’s cement industry recorded strong domestic growth of 8.07 per cent in cement consumption during May, there was also a steep decline in exports and the sector is not performing to full capacity.

The decline in exports during May was 26.13 per cent which led to an overall decline of 0.39 per cent in the cement despatches compared with May 2014.

A spokesman of the All Pakistan Cement Manufacturers Association (APCMA) said the cement industry was still operating below capacity despite almost 7.98 per cent growth in the domestic consumption during the first 11 months of this fiscal. He said overall decline in exports in the first 11 months of 2014-15 was 10.82 per cent that restricted the total growth in the industry to only 3.47 per cent.

Pakistan’s cement industry despatched 25.492Mt of cement for domestic market during July-May period of this fiscal against 23.608Mt despatched during the corresponding period last year, according to the APCMA.

The government has moved to protect the cement industry with its federal budget that has some direct and indirect incentives for the domestic cement industry for next FY15-16 (July – June), which will increase demands for cement in country.

Finance Minister Ishaq Dar said the duty on cement imports as "preemptive action" to promote the local industry and avoid cement dumping. The minster has proposed enhancement of duty on import of cement, rationalisation of tax structure for construction industry/ housing development, a significant rise of 27 per cent in Public Sector Development Programme (PSDP) allocation, a five-year tax holiday for establishing new manufacturing facility in northern province and reduction in corporate tax by one per cent are positive steps for industry.

However, the government also proposes increase in duty on import of coal. According to finance bill, coal attracts one per cent customs duty. Since all other fuels attract higher duty rates, it is proposed that customs duty on Coal be increased from one to five per cent. The industry will comfortably pass on PKR2.0/bag (US$0.019) -PKR3.5/bag (US$0.034) to end consumers.
Riaz Haq said…
#Pakistan real estate Boom: #Karachi and #Islamabad markets record gains …

When prices of real estate stagnated in 2014, all eyes were focused on the next year with hopes that it would bring along some momentum in the market. Truly, the much-needed activity emerged, though in part, in the first half of this year.

In almost all popular localities in Karachi and Islamabad, property prices went up over the six-month period from January to June 2015, showed data released by, a property portal of the country.

Lahore, however, continued to record sluggish activity with prices remaining static this year as well. But this is not a worrying sign. The property market of Lahore often slows down when investors pay more attention to real estate developments in the country’s capital as well as in Karachi.

In an encouraging development, several new projects are on the cards in Lahore, including the 60,000-kanal LDA City and the 40,000-kanal DHA Phase IX. These and other projects are widening the scope of investment opportunities in the city, which will help steady the property market in the long run.

In the first half of 2015, one of the top localities in the city, Lahore Cantt, registered a decline of 9.29% in prices while real estate markets in DHA Lahore, Bahria Town and LDA Avenue-I remained stable.

Average price for a one-kanal plot went down only 1.02% in DHA Lahore in the first half whereas in Bahria Town the same plot cost 3.26% more over the same period.

Similar stability was noted in LDA Avenue-I, where average price for a one-kanal plot edged up a negligible 1.05%.

Though Johar Town continued to offer one of the highest rental yields at 4.26%, DHA Lahore and Lahore Cantt remained the more expensive neighbourhoods. On average, a one-kanal house in the localities cost Rs36 million and Rs37.5 million respectively.

Here, three of the four popular localities recorded decent gains in the first half, with Bahria Town the only top locality posting a slight drop in property prices. In comparison to the miserable second half of 2014, this was a good turnaround for the real estate market in the capital.

A moderate growth was noticed in Sector F-11 and DHA Islamabad as prices of one-kanal plots rose 6.05% and 6.96% respectively. There was also a modest growth of 6.39% in plot prices in Sector E-11.

Bahria Town, however, remained stable with a slight dip of 1.20% in one-kanal plot prices in the first half of the current calendar year.

Sector F-11 was one of the most expensive areas for buying one-kanal houses in Islamabad with an average price of Rs68.2 million. It was closely followed by Sector E-11 where average prices were Rs62.9 million for a one-kanal home.

However, Bahria Town, despite a slight dip in average prices, offered a high rental yield at 4.35%.

With investor focus squarely on Karachi for several months now, the city’s top localities have seen decent rises in prices as well as hectic activity in the first half despite Ramazan and a deadly heatwave.

Gulshan-e-Iqbal and DHA City Karachi recorded handsome price increases whereas DHA Karachi and Bahria Town also posted healthy gains to play their part in a very encouraging overall performance.

Prices of a 500-square-yard plot in DHA Karachi showed a restricted – by Karachi standards – growth of 6.09% while Bahria Town posted a healthy rise of 9.85%.

Prices went up 12.36% in Gulshan-e-Iqbal and 12.23% in DHA City Karachi, indicating a satisfactory and controlled growth.

DHA Karachi was one of the costliest neighbourhoods for buying homes with average sale price of Rs58.9 million for a 500-square-yard house.

Though Gulshan-e-Iqbal offered a relatively higher rental yield at 5.01%, average house prices stood at Rs37.4 million in the locality, well short of the prices prevailing in DHA Karachi.
Riaz Haq said…
Pakistan’s Lucky Cement Ltd. is close to winning a permit to extract limestone in Punjab province, signaling expansion plans by the nation’s largest maker of the building material by market value.
The company will get a limestone quarry for a cement plant in Punjab, and the local administration has approved the deal, said Arshad Mehmood, secretary for Punjab’s mines and minerals department. An agreement is expected to be signed in the next few days, he said.
The Karachi-based cement maker is set to join producers including Attock Cement Pakistan Ltd. and D.G. Khan Cement Ltd. that have announced expansion plans as Prime Minister Nawaz Sharif looks to boost infrastructure spending.
“Everything is positive for construction,” Bilal Khan analyst at Karachi-based Global Securities Pakistan Ltd., said by phone. “If growth stays at the same pace, the person who decides to expand today is the winner.”
Sharif is seeking to accelerate growth in the $247 billion economy to the fastest pace since 2008 with the spending, while China and Pakistan have announced a 3,000-kilometer, $46 billion economic corridor, which includes roads, ports, power plants and dams.
Lucky Cement’s shares have advanced about 50 percent in the past year, outperforming the 21 percent gain in the benchmark KSE100 Index. Shares fell 1 percent to 523 rupees as of 10:21 a.m. local time. They rose to a record last month.
The company operates two plants at 85 percent of capacity in Pakistan. It also has a cement grinding facility in Iraq and is part of a venture that will build a cement plant in the Democratic Republic of Congo.
Riaz Haq said…
Improved Security Situation Drives Property Boom in #Karachi #Pakistan. 22% jump in prices #KarachiOperation

Anyone who bought property during the bloody carnage in Pakistan’s biggest city over the past few years is now cashing in.
Property prices are growing faster in Karachi than in any other major Pakistani city this year as the streets become safer following a security blitz that began in September 2013. Police have counted 68 murder-free days from August 2014 until early December, and the average number of daily killings has dropped to four from about seven.

“Karachi’s market, especially, has us on the edge of our seats,” said Zeeshan Ali Khan, chief executive officer of, which claims to run Pakistan’s largest property website. Sales have “grazed peak after peak” following the security operation, he said.
The safer streets reflect efforts by Pakistani authorities to clamp down on terrorism and organized crime that has deterred investment. More commerce in one of the world’s fastest-growing megacities will also help the national economy: Karachi generates about half of Pakistan’s tax revenue and is home to the country’s stock exchange and central bank.
“Now people have hope things will get better, and Karachi is the place they should be investing,” Arif Habib, chairman of Karachi-based conglomerate Arif Habib group, said in a Dec. 7 interview. “One year ago people were concerned to invest in their businesses in such a situation, or even expand.”
22 Percent Jump
Average property prices in Karachi increased 22 percent to 7,234 rupees ($70) per square foot in October compared with a year earlier, according to By contrast, real estate prices rose 14 percent in Lahore and fell 5.5 percent in Islamabad, the capital.
A reduction in extortion is helping to drive demand in middle-class neighborhoods of Karachi, according to Faraz Arif, head of research and marketing at Arif Habib Dolmen REIT Management Ltd. Previously, some potential buyers would have to pay about 20 percent of the purchase price to gangs in cash, he said.

“For them the difference is significant," Arif said in an interview. “Now those people are more confident.”
Pakistan’s economy is forecast to expand 5.5 percent, the most in nine years, as Prime Minister Nawaz Sharif and a more assertive army chief take steps to tackle power shortages and Islamic militancy that have held back growth. His government is also seeking to narrow the fiscal deficit and sell stakes in state-run companies to meet conditions on a $6.6 billion International Monetary Fund loan.
Army Chief
Better security in Karachi is key to Pakistan’s long-term growth prospects. The city once served as the base for Khalid Sheikh Mohammed, the self-proclaimed mastermind of the Sept. 11, 2001, attacks in New York. Wall Street Journal reporter Daniel Pearl was murdered here in 2002. More than 13,000 people were killed in Karachi since January 2011 -- almost double the number of U.S. military personnel that died in the Iraq and Afghan wars.
While Nawaz Sharif’s government authorized the police in Karachi and paramilitary forces to clean up the city, much of the credit for the improved security has gone to army chief Raheel Sharif, no relation to the prime minister.

Since Taliban militants killed more than 130 students at a military school last December, the military has stepped up a campaign to flush them out of areas along the Afghan border. In Karachi, authorities have also gone after criminal gangs and political parties in a bid to stop turf wars that fomented the violence.
Muttahida Qaumi Movement, Karachi’s biggest political party known as MQM, has accused security forces of targeting its members instead of militant groups like the Taliban and Islamic State.
Outlook Mixed
“The operation should be focused on them," said Aminul Haq, an MQM spokesman. He added that his party was the first to support the crackdown and fully respects the army, paramilitary forces and police.
Riaz Haq said…
#Pakistan #cement sales surge 15.6 percent in July 2015 to Jan 2016. #CPEC #Economy via @sharethis

The data showed that local cement sales surged 15.57 percent to 17.9 million tons in July-Jan 2015/16. However, cement exports slid 24.98 percent to 3.4 million tons.

Cement manufacturers expressed dismay over the indifference shown by the economic planners towards rapidly declining exports.

“Substantial reduction in exports has drastically affected foreign exchange earnings of the country and cement makers are finding it difficult to maintain their existence in the export markets due to high cost of doing business in Pakistan and non-availability of incentives,” said APCMA spokesman.

In July-Jan 2015/16, factories located in north dispatched 14.776 million tons in local markets as against 12.948 million tons in July-Jan 2014/15.

The south-based factories registered a 23 percent growth in domestic sales in the period under review as their local sales stood at 3.12 million tons as against 2.53 million tons earlier.

The north-based mills registered a 22.35 percent decline of exports to 2.16 million tons in the first seven months of this fiscal year. South-based cement manufacturers recorded 29.17 percent exports fall to 1.243 million tons.

The industry dispatched 3.085 million tons of cement in January compared with 2.898 million tons dispatched in the same month a year ago, showing a growth of 6.47 percent.

Again this was mainly attributed to healthy domestic sales. In January, the local sales were 2.699 million tons as against 2.419 million tons earlier, up 11.54 percent.

In January, exports dropped to 386,562 tons from 478,000 tons in the same month a year ago, showing a decline of 19.19 percent.

The APCMA spokesman said despite several reminders on significant issues, which have been eroding export volumes, apparently no interest has been shown by the government to address them.

“Government must take immediate steps to stop smuggling of Iranian cement into the country,” he added.

He further said the government should also give due attention to reduce energy costs by removal of gas infrastructure development cess, reduction of custom duty on coal to zero percent and announcing additional incentive of five percent on cement export by sea in order to reduce the overall cost of operations to make the Pakistani cement industry competitive globally.

- See more at:
Riaz Haq said…
#UAE expats drive up house prices in #Pakistan as #Dubai real estate values fall 15-20% …

According to a Dubai ann­ual market update issued in mid-December, ave­rage residential property prices have fallen 16 per cent and 14 per cent year on year for apartments and villas, respectively, while overall unit transactions declined by 33 per cent.

A soft Dubai property market is encouraging Pakistan expatriates in the UAE to invest back home. This, in turn, is pushing up property prices in Pakistan, resulting in values almost doubling in some areas.

Higher demand, especially in Karachi and Islamabad, was driving prices higher on a daily basis, according to property brokers and developers quoted in a report that appeared on In contrast, residential prices in Dubai have fallen by up to 15 to 20 per cent in recent months.

According to a Dubai ann­ual market update issued in mid-December, ave­rage residential property prices have fallen 16 per cent and 14 per cent year on year for apartments and villas, respectively, while overall unit transactions declined by 33 per cent.

"Ample liquidity for property investment is pushing prices up everywhere, particularly in Karachi and Islama­bad," said Ashraf Hameed, the director of property developer Value Housing.

He cited closer monitoring of the cross-border movement of money and improved law and order situation as reasons behind the uptrend. "We have no problem of law and order in Islamabad while the situation in Karachi has also improved significantly," he added.

M. Anwar, a private investor in Karachi, said: "Property prices in Dubai have dropped 15 to 20 per cent in commercial and semi-commercial areas, and five to 10 per cent in posh areas."

Pakistanis have been among the leading investors in the Dubai property sector. Most of them were businessmen, politicians, government officials and those who migrated to other countries and shifted their property to Dubai for better returns.
Riaz Haq said…
#Pakistan #cement industry continues growth. Per capita consumption to rise from 147kg in 2015 to 250kg in 2020.

Pakistan’s cement industry will continue to grow over the next few years due to strong pricing power and contraction in supply and demand gap, a Topline Securities report said on Tuesday.

The capacity utilisation of Topline Cement Universe – a sample of cement companies listed on Pakistan Stock Exchange (PSX) – is likely to reach 96% in fiscal year 2018 from 78% in fiscal year 2015.

Gross margins of Topline Cement Universe will reach 47% by fiscal year 2020 (which were 34% in fiscal year 2015) while earnings before interest, taxes, depreciation, and amortisation (EBITDA) margins will reach 46% by fiscal year 2020 (34% in fiscal year 2015).

Resultantly, Topline Cement Universe’s profitability is expected to grow at 4-year (fiscal year 2017 to fiscal year 2020) Cumulative Annual Growth Rate (CAGR) of 24%.

Pakistan’s cement industry has entered into a new paradigm. The turnaround in macroeconomic fundamentals, mega projects under the umbrella of China-Pakistan Economic Corridors (CPEC) and booming private sector spending are accelerating local cement demand.

“We believe economic recovery will continue to bolster domestic demand. Based on past trend, we have applied a factor of 2 times to our average real GDP growth forecast of 6% during fiscal year 2017 to fiscal year 2020 in order to arrive at average local cement growth forecast of 12% during the same period,” the report said.

This should take per capita cement consumption of Pakistan from 147kg in fiscal year 2015 to 250kg in fiscal year 2020.

Major capacity additions of 19 million ton (42% of current capacity) worth around Rs192 billion are in pipeline (from fiscal year 2017 to fiscal year 2020) in Pakistan. “Despite these additions, we see no price war risk as additional capacities will easily be absorbed due to buoyant cement demand.”

The government in budget for fiscal year 2016-2017 has changed the federal excise duty (FED) on cement bags from variable 5% of retail price to fixed Rs50 per kg while duty on imported coal is reduced from 6% to 5%. “Thanks to strong pricing power, we believe that, the net impact of Rs33 per bag will be gradually passed on,” the report added.

However some developments can change the present scenario including price competition, imported cement, higher than anticipated rise in gas tariff, delay in construction projects and change in economic policy

Riaz Haq said…
A significant rise in infrastructure projects in the wake of China-Pakistan Economic Corridor (CPEC) is also expected to accelerate demand for iron, steel and cement.
“Imports of both steel scrap and steel products increased by 27.3 per cent and 30.1 per cent, respectively, during July-March FY16,” said the SBP report.
“The imports posted extraordinary growth despite imposition of anti-dumping duties for four months on import of cold-rolled coils and sheets from China and Ukraine,” said the report.

The country produces six million metric tons of steel per year, as per a report published by the State Bank of Pakistan (SBP).

This includes raw products, iron ore and scrap flat products, sheets and plates used in the automotive sector, and long products (steel bars, wire rods, rails, and structures used in infrastructure development, and tubes and pipes).

However, per capita steel consumption in Pakistan is very low at 23.5 kilograms against 58.6 kilograms in India, as well as the Asian average of 261.3 kilograms and the global average of 216.9 kilograms, the report added.
Riaz Haq said…
#UK company to invest $400 million to build #cement plant in #Pakistan. #CPEC #economy

UK company, Asian Precious Minerals (APML), is to build a new cement plant in Pakistan, according to local news reports, with an investment of US$400 million.

The plant is to be built in the province of Khyber Pakhtunkwha in the northwestern region of Pakistan. The investment was announced at a meeting between APML officials, the Chief Minister of Khyber Pakhtunkwha, Pervez Khattak, and officials from the British High Commission.

“We are delighted to be investing in a new cement plant in Khyber Pakhtunkwha,” said Nadim Khan, CEO of APML. “We look forward to constructing a model, state-of-the-art and environmentally friendly cement plant.

Khan also praised the provincial government for improving the security situation in Khyber Pakhtunkwha, which borders Pakistan’s tribal region and Afghanistan, as well as its “pro-business stance and good governance policy”.

“This British investment will help create local jobs and stimulate the local economy,” said Chief Minister Khattak. “I am glad to see that the UK recognises the dramatic improvements in the province and I look forward to welcoming more British companies in future.”

Pakistan’s cement sector is currently booming with utilisation rates at cement plants reaching over 90%, according to the All Pakistan Cement Manufacturers Association. In the six months to the end of 2016, cement shipments in the country grew to 19.896 million t on the back of local demand growth of 11.07%.

“Pakistan growth is being driven by the Economic Corridor with China (CPEC),” according to cement industry analysts, IA Cement.

“The CPEC allocates US$11 billion to infrastructure projects and US$35 billion towards new power projects and has already led to a strong double-digit growth in cement demand in 2016.In 2017, many projects will either reach completion or be in the full construction phase [and] we therefore expect another year of strong growth with cement demand rising 8 – 10%.”
Riaz Haq said…
#China building boom to churn out #Pakistan's largest steel IPO with #steel output growing 23% in 2016. … via @markets

Agha Steel Industries Ltd. is planning Pakistan’s biggest-ever private sector initial share sale this year to help boost output as China funds more than $55 billion in infrastructure projects across the nation and a buoyant stock market spurs investor demand.

The Karachi-based company plans to raise as much as 10 billion rupees ($95 million) selling a 25 percent stake, Executive Director Hussain Agha said in an interview. The sale will be the largest since the 12-billion rupees government stake sale of Habib Bank Ltd. in 2007, the country’s largest IPO yet.

Steel and cement makers in Pakistan are expanding to meet demand as the “One Belt, One Road” trade route financed by China spurs construction. The nation’s economy has grown at about 5 percent annually since 2013, encouraging Agha’s peers including International Steels Ltd. and Aisha Steel Mills Ltd. to lift production.

“You need roads, sky rises and housing,” said Agha. “Pakistan’s steel industry is in an infancy stage and growing at a massive pace -- the whole environment will change.”

Read more: Chinese Largesse Lures Countries to Its Belt and Road Initiative

The company will use the funds for $50 million expansion that will triple output to 500,000 metric tons within two years. Production will then double to a million tons by 2023, he said. Habib Bank has been appointed financial adviser while Arif Habib Ltd. and BMA Capital Ltd. were picked as book runners for transaction.

Pakistan’s steel output grew 23 percent to 3.6 million tons in 2016, the biggest gain among 40 nations, according to the World Steel Association. Agha Steel expects construction-grade steel, such as rebars and wire rods, to grow as much as 12 percent annually for the next three years.

The construction sector expanded 13 percent in year ended June 2016, more than twice the pace in the previous 12 months, according to State Bank of Pakistan’s annual report. Rapid urbanization and rising income levels has left the nation with an annual shortfall of 500,000 homes, according to real-estate developer Arif Habib.

“Real-estate is the main engine for this growth, it has really picked up,” said Ayub Khuhro, chief investment officer of Karachi-based Faysal Asset Management Ltd., which has about 8 billion rupees in stocks and bonds. “The government is also willing to protect companies with anti-dumping measures.”
Riaz Haq said…
#Karachi's "land mafia" killing exposes the dark underbelly of #Pakistan's real estate boom. … via @business

Perween Rahman was returning home one evening in March 2013 from her job as head of the Orangi Pilot Project, which for years has pushed land title claims for Karachi’s poor, when she was shot three times by a gunman on a motorcycle.

Rahman died as she was rushed to hospital by her friend and colleague Anwar Rashid. “He was a sharp shooter,” said Rashid, now 71 years old and white-haired, but still a director of the OPP, pointing to his throat and chest to indicate where Rahman was hit. “This is because of the land -- the police, the mafia, all involved.”

“Public land has commonly been illegally regularized and sold,” Brussels-based conflict watchdog International Crisis Group said in a February report. “It has become the city’s most prized and contested commodity, with federal, provincial and local land-owning agencies, military cantonments, corporate entities and formal and informal developers competing to extract as much value as possible. Given the fiscal stakes, disputes are settled by bribery and political, bureaucratic and police patronage, and even deadly force.”


Some 13 different government agencies are tasked with regulating laws and coordinating development, but slums have sprung up across the city with little regard for any of these.


Karachi’s real estate in recent years has offered better returns than Dubai and London, according to tycoon Arif Habib, who is building a $2 billion gated estate in the Naya Nazimbad district, neighboring an area that used to be controlled by Taliban militants. One of his units said on Monday that it has filed an application with the government to buy an extra 900 acres to expand the project.

Habib also pioneered and listed Pakistan’s only real estate investment trust in 2015, offering a stake in one of Karachi’s most prominent malls and office towers. Developers including Habib and rival builders such as real estate baron Malik Riaz Hussain and the military’s property arms, are tapping into the price boom.


Rahman’s family and associates suspect her work mapping Karachi’s poor districts and helping residents gain land titles put her in conflict with powerful criminal networks. The OPP mapped more than 1,000 settlements between 2006 and 2013, though that stopped after Rahman’s death and subsequent threats and attacks on the group’s staff.


One example of heightened scrutiny is property mogul Hussain’s vast city-sized Bahria Town development about an hour’s drive from Karachi. Construction began in 2014 and, when completed, the enclave will boast a 36-hole golf course, theme parks, five-lane highways, Dubai-style fountains, and what it says will be the world’s third-largest mosque.

A 125 square yard house in Bahria Town that initially sold for 1.73 million rupees ($16,000) is now between 2.4 million rupees to 3.5 million rupees, said M. Akmal Khan Khattak, a marketing manager at real-estate agent Athar Associates. He’s been recommending the purchase to his clients.


“They have provided security, they have provided electricity,” Tariq said, referring to Bahria Town. “People see their success and they will follow.”

Sindh province, of which Karachi is the capital, is now looking to computerize land records which may help curb corruption, Mohammad Zubair, governor of the province and a member of the federal ruling party, said in an interview in March. This was earlier done in Punjab, Pakistan’s most populous region that’s also governed by the same party.

“Of course the challenge will always remain,” Zubair said when asked about land grabbing. “Because the political players and people in important positions are involved.”
Riaz Haq said…
#Pakistan #cement capacity reaches 47 million tons. Utilization at 87% with shipments at 41 million tons. #CPEC

The capacity utilisation of the cement industry was high at 86.46 percent in July 2017, while the annual cement despatch capacity of the industry has increased to 46.94 million tons.

Local dispatches from units based in northern region of the country were 2.423 million tons while their export despatches were 0.338 million tons in July 2017 as opposed to 1.516 million tons local and 0.306 million tons export despatches in July 2016. The turnaround after a dismal performance in June 2017 took the industry by surprise and the sharp increase in despatches in July 2017 revived hopes for the sector. The despatches were achieved despite political turmoil in the country and unprecedented rains throughout the country which depicts the maturity of the construction sector of the country. South based mills also recorded a growth in local despatches which increased from 0.352 million tons in July 2016 to 0.483 million tons in July 2017; whereas, exports took a hit going down to 0.138 million tons from 0.159 million tons in July 2016. A spokesman of All Pakistan Cement Manufacturers’ Association said that the despatch figures for July are most encouraging. However, he said that this does not mean that the economic planners ignore the genuine difficulties faced by this sector.

He said the industry is performing in stiff regulatory environment and is only surviving because it has upgraded its technology that has provided it the strength to take any challenge head on.
Riaz Haq said…
Pakistan’s construction industry – the hot cake for foreign investors

By Tehreem HusainPublished: October 23, 2017

The construction industry is playing an important role in economic growth of Pakistan. Recent (provisional) estimates published in the Economic Survey of Pakistan show that the industry grew 9.1% in FY17 and contributed 2.7% to the country’s gross domestic product (GDP).

BMI Research has also provided a healthy growth outlook for the sector, putting it at 11.8% annually from 2016-20 and 9.1% over 2016-25.

The signing of the China-Pakistan Economic Corridor (CPEC) agreement and improvement in the country’s security situation have been the key to giving boost to not only the construction industry, but Pakistan’s image abroad. With China having the first-mover advantage in injecting foreign investment into the country, other countries have followed suit.

The sector has also been an important recipient of foreign direct investment (FDI). This can be judged from the latest figures provided by the State Bank of Pakistan, which show that the construction industry received a net inflow of $35.7 million in August 2017.

How attractive the industry is perceived to be for foreign investors can be gauged from the fact that in the current fiscal year from July-August FY18 the industry has received $55.7 million relative to $1.6 million in the same period of last year.

Locally, investment has also been boosted by government policies such as reduction in duties and taxes on building materials like steel, construction machinery and equipment and computerisation of land ownership records.
Riaz Haq said…
Construction sector records impressive 9% expansion

The construction sector has once again posted a strong growth of 9% in the outgoing year, lower than the 14.6% increase in 2016, but much higher than the average growth of the past five years, according to the Pakistan Economic Survey 2016-2017.

Excluding the exceptional growth of 2016 and 2017, the average growth in the construction sector up to 2015, since FY12, was just 4%. Construction industry officials believe the recent growth is encouraging for the industry as well as the country because this will create new jobs.

According to government estimates, construction-related activities will gain further momentum on the back of increased public sector development spending coupled with infrastructure and power sector development projects under the China-Pakistan Economic Corridor. The construction sector contributes 2.4% to Gross Domestic Product, according to government assessments.
The robust construction activities also led to an increase in demand for steel and allied products, according to the survey.

“Cement growth derived from robust domestic demand, which allowed manufacturers to enhance their capacity utilisation. The outlook is encouraging on account of firm demand due to flourishing housing schemes and rising development spending along with anticipated CPEC-related projects,” it added.

Govt may withdraw special income tax

Despite extraordinary growth, the government is upset as it did not achieve its tax collection target from the sector in the outgoing fiscal year. “It is true that we could not collect the targeted amount from the real estate sector in this year,” said Finance Minister Ishaq Dar on Thursday.

However, he said that tax collection increased after the implementation of the new property valuation methodology by the Federal Board of Revenue in 2016.

Dar also said that construction industry officials requested the government to gradually implement the new tax regime, otherwise it could hurt the current high growth of the industry. Revenues from the construction sector dipped to a meagre Rs112 million in the outgoing fiscal year against conservative official annual estimates of Rs8 billion.

The representatives of builders and developers committed to tax authorities that the industry would pay up to Rs28 billion in income taxes under the new final tax regime, which was implemented in mid-2016.
Riaz Haq said…
Cement sales touch record high at 4.2 million tons in October

By Our CorrespondentPublished: November 4, 2017

Propelled by demand from new infrastructure projects in the country, overall cement sales touched a new peak at 4.222 million tons in October 2017, up 19.71% from the offtake of 3.526 million tons in the same month of the previous year, according to statistics released by the All Pakistan Cement Manufacturers Association on Friday.

Total sales in the first four months (Jul-Oct) of fiscal year 2017-18 reached 14.570 million tons, which was 16.53% higher than dispatches of 12.503 million tons in the corresponding period of previous year.

The increase came from the surge in domestic demand, though exports stood unimpressive and dropped 16.16%.
Domestic cement consumption rose 25.61% to 3.779 million tons in October 2017 whereas exports continued to decline as they went down 14.55% to 0.443 million tons.

“Higher cement consumption in the country is a sign of growing economy that is having positive impact on over three dozen industries connected with the construction sector,” an association spokesman commented.

However, he said exports were below par which was a cause for worry because the industry still had idle capacity. “Almost all the decline in exports is via sea; shipments to India have also been affected but not to that extent,” he said.

The spokesman pointed out that demand in the north zone stood surprisingly very high as consumption in the region hit 3.148 million tons in October 2017. “It is for the first time that the north zone has consumed more than three million tons in a month.”

In October 2016, the consumption in the north zone totalled 2.489 million tons.

Cement demand in the southern region increased from 0.519 million tons in October 2016 to 0.631 million tons in October 2017.

Owing to the robust growth in domestic cement consumption in the first four months of FY18, the industry utilised over 93% of installed capacity.

“This is the highest capacity utilisation in the past 20 years, however, 1.08-million-ton capacity is still sitting idle,” he said, suggesting this could have been consumed by exports had government policies been export-friendly.

He cautioned that higher cement consumption did not mean economic planners should ignore the challenges faced by the industry.

Among the challenges, he cited the country’s tough regulations and said the industry was surviving because it had upgraded its technology that provided the strength needed to take any challenge head-on.

“Our quality is the best in the region. No cement can compete with Pakistani cement if imported at real and fair value after paying all levies. However, weak border controls and lax customs vigilance allow cement from across the border at unfair valuations,” he added.

The spokesman asked the government to cut the rate of excise duty in order to give a further boost to demand. Similarly, the duty on coal imported by the sector should be brought on a par with other sectors.
Riaz Haq said…
#Pakistan #cement production has grown from 35 million metric tons in 2015 to 55 million metric tons in 2021. #CPEC #NayaPakistan #housing #infrastructure #construction #exports

Update on Pakistan, March 2022 - Cement industry news from Global Cement

(Graph in the article shows Pakistan cement production growth from 35 million tons in 2015 to 55 million tons in 2021)

Data from the All Pakistan Cement Manufacturers Association (APCMA) shows that cement despatches have been steadily growing since the mid-2010s with a blip in 2020 caused by the start of the Covid-19 pandemic. The upward trend has been driven by local sales. Exports have generally grown at the same time, with more variance, but they are yet to regain the high of nearly 11Mt reported in 2009. On a rolling annual basis, local sales have remained steady since mid-2021 but exports have been slowly falling. In April 2021 they were 9.17Mt but by February 2022 they were 7.33Mt. For the February 2022 figures APCMA blamed this on the growing cost of production, rising international freight rates, mounting coal prices and a trade ban with India. On that last point for example, Pakistan-based producers exported 1.21Mt of cement to India in the 2017 – 2018 financial year before exports stopped after February 2019. Despite a brief respite in the spring of 2021 talks are still ongoing to resume trade with India.

On the corporate side the country’s largest cement producer by capacity, Lucky Cement, drew the same conclusion as the APCMA with its half-year results to 31 December 2021. Its local sales volumes were down a little but its exports were down a lot. It noted that the reason its local sales were falling but national industry local sales were up slightly was due to some competitor plants being non-operational in the previous year. However, the company managed to keep sales revenue and earnings increasing year-on-year by successfully combating growing input costs with price rises. Bestway Cement, the country’s other large producer, reported a tougher situation in the second half of 2021, with both local sales and export volumes down. This was attributed to a boom in construction activity in the second half of 2020 as Covid-19 lockdowns were eased. Demand for cement since then was said to be ‘sluggish’ due to inflation and high commodity prices. It also pinned its marked fall in exports on political and economic instability in Afghanistan. However, turnover and operating profit were both up due to higher selling prices.

Elsewhere in the sector news since the start of 2021, Pakistan’s exports to South Africa remained stymied in early 2020 due to a review of ongoing tariffs and the government decision to restrict infrastructure projects to only using locally produced cement. On the sustainability front the APCMA started to set out its decarbonisation strategy in November 2021. It may have a long way to go given that a think tank reported earlier in the year that the cement sector was the largest emitter of coal-related CO2 emissions in the country, even more than power generation. Alongside this plenty of capacity additions have been announced. Lucky Cement started commercial cement production at its 1.2Mt/yr integrated Samawah cement plant in March 2021. Various new cement plants and upgrades to existing plants have been proposed by Bestway Cement, Cherat Cement, Fauji Cement, Kohat Cement Company, Lucky Cement and Maple Leaf Cement. Finally of note to a sector troubled by energy prices, in September 2021 the Pakistan International Bulk Terminal said it was going to upgrade its coal handling capacity to around 17Mt/yr by 2024.

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