Pakistan to Become World's 6th Largest Cement Producer By 2030
Pakistan's rank as world's leading cement producer will rise from 16th in 2018 to 6th by 2030. It will replace Japan among the world's top 10 cement producing nations in 2030, according to World Cement Association forecast. Cement consumption is an important indicator of development activity and economic growth. Pakistan's domestic cement sales are continuing to grow, up 9.2% in October, 2019 from the same month last year. Total sales (local and export) in 4-month period between July and October 2019 stood at 16.117 million tons, 4.5 per cent higher than 15.419 million tons during the same period last year.
Last year, Pakistan produced 41.14 million tons of cement, according to International Cement Review. The country's cement industry has already built capacity to produce 59.5 million tons in anticipation of future demand for housing and infrastructure. World Cement Association expects Pakistan to produce 85 million tons, 2% of the world's cement production in 2030.
Currently, China produces more than half of all the cement used in the world. India produces 8% and and European Union 3%. The three will continue to be at the top in 2030. However, China's share will drop to 35% while India's share will double to 16%.
Pakistan's domestic cement sales grew 9.2% in October, 2019 from the same month last year. Total sales (local and export) in 4 months period between July and October 2019 stood at 16.117 million tons, 4.5 per cent higher than 15.419 million tons during the same period last year. Cement consumption is an important indicator of the state of economy. It is the most important construction material. It drives construction industry that is among the biggest employers in the world. Cement is used to build homes, factories, schools, hospitals, roads, bridges, ports and all kinds of other infrastructure.
Development of infrastructure under China Pakistan Economic Corridor projects is continuing to drive cement demand in the country. In addition, construction of major new housing communities is underway. One example of such a community is Karachi's Bahria Town. It is being built on the outskirts of Pakistan's financial capital is among the world's largest privately developed and managed cities. It is spread over an area of a little over 70 square miles, larger than the 49 square miles area of San Francisco. When completed, Bahria Town will house over a million people, more than the entire population of San Francisco.
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| Source: World Cement Association |
Last year, Pakistan produced 41.14 million tons of cement, according to International Cement Review. The country's cement industry has already built capacity to produce 59.5 million tons in anticipation of future demand for housing and infrastructure. World Cement Association expects Pakistan to produce 85 million tons, 2% of the world's cement production in 2030.
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| Cement Sales in Pakistan. Source: Bloomberg |
Currently, China produces more than half of all the cement used in the world. India produces 8% and and European Union 3%. The three will continue to be at the top in 2030. However, China's share will drop to 35% while India's share will double to 16%.
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| Top Cement Producing Countries in 2019 |
Pakistan's domestic cement sales grew 9.2% in October, 2019 from the same month last year. Total sales (local and export) in 4 months period between July and October 2019 stood at 16.117 million tons, 4.5 per cent higher than 15.419 million tons during the same period last year. Cement consumption is an important indicator of the state of economy. It is the most important construction material. It drives construction industry that is among the biggest employers in the world. Cement is used to build homes, factories, schools, hospitals, roads, bridges, ports and all kinds of other infrastructure.
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| Recent Spike in Public Sector Development Spending (PSDP) |
Development of infrastructure under China Pakistan Economic Corridor projects is continuing to drive cement demand in the country. In addition, construction of major new housing communities is underway. One example of such a community is Karachi's Bahria Town. It is being built on the outskirts of Pakistan's financial capital is among the world's largest privately developed and managed cities. It is spread over an area of a little over 70 square miles, larger than the 49 square miles area of San Francisco. When completed, Bahria Town will house over a million people, more than the entire population of San Francisco.
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South Asia Investor Review
Karachi's Bahria Town
M5 Motorway to Boost Pakistan's Transport Sector
Pakistan is World's Fastest Growing Steel Producer
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The project will reduce total distance between both the cities from two and half hours to only 50 minutes.
The project was initiated by the previous government of Pakistan Muslim League-Nawaz (PML-N) in 2017. The project is completed by Frontier Works Organisation (FWO) on Built Operate Transfer (BOT) mode. The maintenance and operation of said motorway would remain with FWO for next 25 years after which the road would be handed over to the National Highways Authority.
When contacted, a spokesperson for NHA Muhammad Saleem confirmed that the motorway has been opened for commuters on Wednesday. He informed that the inauguration ceremony of this project could not be arranged due to the emergence of corona virus.
According to the NHA documents, the four-lane motorway having two lanes on each side has been completed at the cost of around Rs.43 billion. There are 7 interchanges, 6 flyovers, 24 bridges, 22 underpasses, 13 subways and 274 culverts have been included in this project.
The motorway starts from Lahore where it is connected with eastern bypass and Ring Road while its first interchange is situated at Kala Shah Kaku which joins it with N-5, commonly known as GT Road as well as the Lahore-Islamabad Motorway (M-2).
Its second interchange links Muridke and Narowal while third interchange connects Aimanabad and Wando. The fourth interchange links district Gujranwala and Pasroor while the fifth one is between Daska and Pasroor.
The sixth interchange falls between the Daska and Sialkot while the last interchange is situated around 15km in the west of Sialkot city.
It is pertinent to mention here that this is the place which is considered as a gateway to Sialkot, Kharian and Wazirabad.
When contacted by The Nation, MNA from Sialkot and a senior leader of PML-N Khawaja Muhammad Asif maintained that the completion of Lahore-Sialkot Motorway is the fulfilment of another promise made by his leader Nawaz Sharif — the former prime minister.
“It was the vision of Nawaz Sharif to connect all regions through infrastructure to strengthen the federation of Pakistan”, he said, adding; “We had the plan to extend said motorway from Sialkot to Dina via Kharian and then it was to be linked with proposed Mirpur to Muzaffarabad Motorway and Lahore-Islamabad Motorway (M-2) by crossing Rawat at Rawalpindi.
He criticised by saying that the incumbent government is visionless and its agenda is destruction not the development.
The completion of this long-awaited project will improve connectivity of industrial triangle of Sialkot, Gujranwala, Gujrat-Wazirabad to the rest of the country especially Lahore — resulting in a big boost to exports.
The area was a key manufacturing part of the country, accounting for about 15 percent of Pakistan’s annual exports. Exports from Sialkot included sports goods, surgical equipment, leather garments, riding gear, polo equipment, badges, motorbike accessories and agricultural products including the world-famous Basmati rice. The neighbouring Gujranwala is the center of ceramics and textile products, while Wazirabad and Gujrat provide a big share of cutlery.
All Pakistan Cement Manufacturers' Association (APCMA) has reported that country saw a growth of 28 per cent in cement and clinker exports during first eight months of the ongoing financial year 2019-20. It reached 5.939Mt in 8MFY19-20 and can be attributed to an increase in cement exports to Afghanistan and unprecedented surge in clinker exports to the global market.
However, Pakistan's Federal Bureau of Statistics is yet to release official data for the export of cement and clinker from Pakistan for the period of February/July – February 2019-29.
According to APCMA, cement exports to Afghanistan rose by 54.8 per cent to 1.737Mt 8MFY20, but exports to India remain suspended since last year. Cement exports from Pakistan to other international markets fell by three per cent to 1.297Mt. However, clinker exports continued to bode well, recording growth of 100 per cent with dispatches of over 2.904Mt clinker.
Outlook
Moving forward, the corona virus pandemic has engulfed global trade and industry. Pakistan has closed its borders with Afghanistan and Iran in a bid to stop spread of virus and this has also suspended export of cement from Pakistan to Afghanistan.
In addition, State Bank of Pakistan (SBP) is scheduled to announce its monetary policy today. The industry, including cement, is desperately expecting reduction in interest rate from 13.25 per annum following the impact of the corona virus, slowdown in the world economy, little fall in inflation, etc. If is reduced, it would greatly benefit the industry on financing front in Pakistan.
The government of Pakistan has ordered the resumption of all infrastructure and energy projects that are part of China's Belt and Road Initiative, but experts believe the move is a matter of face-saving.
Work on the China-Pakistan Economic Corridor, a major piece of the Belt and Road, stopped when the novel coronavirus started to spread in Pakistan in February. According to Johns Hopkins University data, Pakistan has confirmed 9,216 cases as of Tuesday, including 192 deaths.
Naghmana Hashmi, Pakistan's ambassador in Beijing, told Pakistani media on Sunday that a number of mechanisms have been established to complete all corridor projects within the prescribed time frame. But analysts say restarting the projects at the height of the pandemic is meant to spare Beijing and Islamabad embarrassment.
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Amid the economic crisis, some have questioned the economic viability of Belt and Road projects. According to the Planning Commission of Pakistan, the country's top development planning body, Chinese skilled laborers are paid 1,300% more than Pakistani laborers for the Main Line 1 (ML-1) railway project, a discrepancy it says must be rationalized.
The commission has also asked Pakistan Railways to evaluate the impact of a huge Chinese loan of almost $9 billion for the ML-1, which is the single largest infrastructure project for the corridor in the country. Pakistan expects 90% of the funding for the ML-1 to come from the Chinese loan. The commission fears the terms may saddle the country with heavy debt if it is not looked into now.
On the other hand, there are bullish voices who say that resuming Belt and Road projects is worth the risk.
Hasaan Khawar, a public policy analyst based in Islamabad, believes the corridor's special economic zones can help Pakistan solve its economic woes. "The world is changing fast, and it will be a different place by the time the pandemic is over. Investment flows will shrink, and China will be one of the very few countries with available capital," Khawar said. He added that the corridor and the zones provide a ready framework for Pakistan to attract Chinese capital and should, therefore, be a priority for Pakistan.
Malik believes that the aftermath of the COVID-19 crisis will leave China better positioned as a global power and savior of a world in deep crisis. After this, the world will see a continuation and expansion of Belt and Road projects, he says.
Kugelman sees the corridor as the most concrete and active part of the Belt and Road and says its trajectory will be shaped to a great extent by how the corridor develops. He adds that if corridor projects are put on hold until the pandemic has ended, the Belt and Road as a whole could take a pause. If they move ahead, that portends more forward movement for the initiative in the near future, Kugelman says.
https://www.tabadlab.com/wp-content/uploads/2019/05/Tabadlab_Mortgage-Design-Low-Cost-Housing_Working-Paper-02.pdf
The
government has announced the Naya Pakistan Housing Program (NPHP) to facilitate the construction of
five (5) million units. To assist buyers with home ownership, the State Bank of Pakistan (SBP) has relaxed
the prudential regulations that govern lending in the housing sector. The SBP policy allows for low-income
households to purchase housing units against a self-amortizing fixed rate mortgage (FRM) for a period of
12.5 years. Khalil and Nadeem (2019b) have shown that announced prices for housing units under NPHP
(Phase I), and the prevailing income levels amongst the low-income target segments, the SBP policy is not
likely to achieve its objectives.
This paper reviews international literature analyzing various mortgage designs, followed by an overview of
two options that may provide the optimum model of mortgages for low-cost units in Pakistan. A proposal for
a low-cost housing finance scheme, in light of local characteristics, is then presented along with a
framework for managing and measuring the scheme.
Instead of encouraging self-liquidating fixed rate mortgages for low-cost housing units (as recommended by
the SBP policy), the government should provide outside equity in the form of shared equity mortgages
(SEMs) to assist prospective buyers to become home owners. The joint equity in this proposed path forward
will maximize initial down payment and thus reduce the amount to be financed by banks. This will limit the
debt incidence for the borrower. Studies show that such mortgage structures increase affordability, and limit
the losses of borrowers, as well as losses to the wider economy under recessionary conditions. Additionally,
based on practices in developed mortgage markets, the amortization period of the mortgage should be
doubled from 12.5 years to 25 years. The paper concludes with a discussion on implementation modalities
and discussion points pertaining to the proposals presented.
http://www.mortgagenewsdaily.com/08282019_homeownership.asp
In 2015, 37 percent of households did not own a home and 47.1 percent did not have a retirement account. For those who had both, the home equity and savings accounted for 62.9 percent of the household's net worth. Equity provided 34.1 percent and retirement accounts made up 28.8 percent
From there, the percentage of assets contributing to wealth drops off sharply. The third and fourth categories, stocks/mutual funds and bank accounts made up about 8.5 percent each. Some of the most commonly held assets made up only a small portion of wealth, for example, 91 percent of households hold those fourth-ranked bank accounts while the largest contributor to wealth, home ownership was the third most commonly held asset. While the median amount of home equity was $95,800, the median value of assets at financial institutions was $4,600.
There were significant differences in worth within categories of age, gender, race, education, and employment. Having health insurance also appears to be a factor although it would be a result rather than a cause.
Unmarried female householders between the ages of 35 and 54 had a median wealth of $14,860. That was 39.5 percent of the median wealth held by unmarried males of the same age. That difference, however, disappeared in the 55- to 64-year old group; both unmarried women and their male counterparts had grown their net worth to about $60,000.
Non-Hispanic white and Asian householders had more household wealth by far than black and Hispanic householders. Non-Hispanic whites had a median household wealth of $139,300 and Asians $156,300 compared with $12,780 for black and $19,990 for Hispanic householders.
Households in which the most educated member held a bachelor's degree had a median wealth of $163,700, compared with $38,900 for households where the most educated member had a high school diploma.
Not surprisingly, those households in which at least one person had a full-time job for the entire year had a higher net worth ($101,000) than those where all members had a part-time job ($61,690) or were unemployed ($22,100). Households in which people were without health insurance all or part of the year had dramatically lower median wealth: $16,860, compared with $114,000 for households in which all members had health insurance for the entire year.
Pakistan's domestic and overseas cement dispatches figures for October 2020 are officially yet to be released by the All Pakistan Cement Manufacturer Association (APCMA), but Lucky Cement Ltd's CEO, Mohammad Ali Tabba, has estimated a record growth to 5.7Mt, increasing from 4.4Mt in September 2020. The MoM rise of 29.5 per cent in dispatches in October was possible due to the increase in domestic and export demand as well as the speedy momentum in Pakistan's economy.
During an interview to a local broadcasting channel, Mr Tabba requested the government to announce a long-term policy for the manufacturing sector of the county as it has potential, along with textile sector, to earn US$40bn in next 4-5 years. He expressed that Pakistan's cement industry had sustained the impact of COVID-19 due to the smart lockdown policy of the government and a series of incentives announced by the Central Bank of Pakistan for short- and long-term financial support to industrialists during this period. In addition, government provided a unique package for the growth of the construction sector. Mr Tabba was optimistic that growth potential exists in all sectors as the government’s policies are conducive for their development and progress, besides some challenges on energy and agriculture sectors.
On the same lines, Pakistani business tycoon, stock trader and the founder/chairman of the AKD Group (trading and research house), Aqeel Karim Dhedhi, has confirmed the unprecedented growth in cement dispatches in
https://www.dawn.com/news/1589282/bad-policy-good-intention
The steel demand has picked up sharply since June following the resumption of business activities after the decline in the Covid-19 infections in Pakistan. The unaudited accounts of some of the major companies listed on the Pakistan Stock Exchange (PSX) for the first quarter of the ongoing financial year to September confirm that the industry is on the path of quicker recovery from the severe pressures of the International Monetary Fund mandated economic stabilisation policies exacerbated by the negative impact of the coronavirus pandemic in the last quarter of the previous fiscal year.
The accounts show that the companies have recorded better top-line growth this year so far when compared with their performance during the corresponding period last year. The bottom lines of the steel manufacturers, who had suffered significant losses last year, are also turning green from red. The rebound in the fortunes of the steel firms is ascribed mainly to the pent-up demand unleashed by the Covid-19 economic stimulus package implemented by the State Bank of Pakistan (SBP), including the reduction of 6.25 percentage points in the policy interest rate to seven per cent, to fight off the effects.
“The impact of the construction and housing package announced by the government is yet to come on the steel industry,” Meher Kashif, the managing director of Model Steel, one of the largest steel companies with a manufacturing capacity of 600,000 ton, asserted during an interview with this correspondent. “The demand in the construction sector, which feeds into 35-40 allied manufacturing industries and services, remains subdued so far. The reasons are as clear as day: the public sector development spending has been slashed substantially; no new industrial project is being undertaken, and no large commercial project is coming up,” he elaborated.
Speaking about Prime Minister Imran Khan’s generous housing initiative, Kashif explained that the measures announced favoured the large corporate companies, which do not see much demand for housing in the market at this moment. The smaller contractors, who work with a capital of up to Rs100 million, do not find the package attractive enough because of requirements of documentation, he added.
“The developers and investors have used the construction package to purchase land but nobody has until now announced any major scheme. That’s why you see the land prices falling again. The government needs to find a solution to support the undocumented small builders who operate in the informal economy to construct one or two houses a year and inspire confidence and bridge the trust gap or the success of its housing initiative.”
The raft of lucrative policy, fiscal, and monetary measures announced to push-start construction and housing include no-question-asked-on-source-of-income-amnesty-scheme on the investments made in the construction industry before the end of 2020, and tax cuts and exemptions for real-estate developers and builders. These incentives were topped up later with cash support of Rs300,000 each on the first 100,000 housing units in the price range of under Rs2.5m (this does not include the cost of land) and subsidised mortgage finance for 10 years on the construction of 5-marla and 10-marla housing units.
The All Pakistan Cement Manufacturers Association said that cement consumption may increase further if the government rationalises duties and taxes and withdraws excise duty.
https://www.globalcement.com/news/item/11571-pakistan-dispatches-record-monthly-cement-volumes-in-2020
https://tribune.com.pk/story/2279722/cement-steel-prices-to-remain-high
Pakistan’s cement sales in the second quarter of fiscal year 2020-21 touched an all-time high of 15.1 million tons, up 11% quarter-on-quarter as well as year-on-year, according to a report of Topline Securities.
In the first half of FY21, cement sales rose 16% year-on-year to 28.6 million tons, it revealed.
“Cement prices will register a further hike as capacity utilisation is increasing robustly,” Topline Securities’ Deputy Head of Research Shankar Talreja told The Express Tribune. “The power to influence prices is with manufacturers at present.”
Industry utilisation based on total sales came in at 91%, adjusted for closed capacities, in the second quarter (Oct-Dec) of FY21. Based on just local sales, the utilisation stood at around 77% with 86% in the northern region and 48% in the southern region.
The strong growth in cement sales could be attributed to economic recovery in the face of low interest rates, announcement of a construction package, allocation of banking sector liquidity to the construction and housing sector and beginning of construction of dams, he said. In the last three months, housing loans increased by Rs43 billion, he added.
“During the outgoing quarter, coal prices surged to an average of $60 per ton compared to $55 per ton about six months ago,” he said. “As a result, fuel cost per ton for major cement companies is expected to increase by 10% quarter-on-quarter.”
To pass on the impact to consumers, the cement producers hiked prices in December 2020 by around Rs20 per bag in the north to Rs570. JS Global analyst Arsalan Ahmed told The Express Tribune that steel prices were on the rising trend.
Pakistan Large-Scale Steel Producers (PALSP) Secretary General Syed Wajid Bukhari said due to shortage of scrap globally, its price had risen above $500 per ton and as a result, rebar rates were increasing in Pakistan. “Local companies, however, are working at margins of less than 5%,” he said.
He added that Pakistan was almost totally dependent on imported raw material for producing steel and requested the government to take urgent measures to contain the impact of price hike on the mega infrastructure projects as well as other ongoing construction projects.
The industry suggested to the government to remove sales tax for some time and reduce the cost of electricity to offset the impact of soaring raw material prices, which was a global phenomenon, he said.
However, the government did not take any measures to address the situation, he lamented.
“We believe that the steel sector has been ignored as it is not receiving much-needed attention from the government,” he said.
Recently, the demand for steel picked up but margins remained very low and most of the large units were working at 50-60% of their capacity, he said.
“In recent months, steel prices have increased by 55% in India,” he said. “In the US, prices are likely to touch $1,000 per ton, which is twice the rate being charged a few months ago.”
The cement sector posted the highest-ever monthly growth of 44.39 per cent in March at 5.773 million tonnes from 3.722m tonnes in the corresponding period last year due to a massive increase in domestic consumption and exports.
According to a local media report that compiled data released by the All Pakistan Cement Manufacturers Association (APCMA), local cement dispatches in March 2021 stood at 4.563m tonnes, up by 42pc compared to 3.214m tonnes in the same period last year whereas, exports surged by 60pc from 507,480 tonnes in March 2020 to 810,962 tonnes in March 2021.
During the month under review, cement mills in the North dispatched 3.809m tonnes to local markets against 2.749m tonnes in March 2020, up by 38.52pc. In March 2021, south-based mills dispatched 753,704 tonnes in domestic markets, which was 62.28pc higher than 464,440 tonnes in the same period last year.
Exports from North-based mills registered an enormous increase of 162.58pc as the volumes increased from 106,759 tonnes in March 2020 to 280,330 tonnes in March 2021.
Exports from the South rose by 32.42pc to 530,632 tonnes in March 2021 from 400,721 tonnes during the same month last year.
During the first nine months of the current fiscal year (9MFY21), total cement dispatches (domestic and exports) were 43.325m tonnes that was 17pc higher than 37.035m tonnes during the corresponding period of last fiscal year.
https://twitter.com/haqsmusings/status/1416448327764221952?s=20
#imrankhanPTI's #NayaPakistan #Construction Bet Sees #Cement Firms Boosting #Investment. #Pakistan’s cement production capacity will increase by 31% to 91 million tons a year after the announced expansions are completed. #economy https://www.bloomberg.com/news/articles/2021-07-13/khan-s-construction-bet-sees-cement-firms-boosting-investment
A group of 19 cement manufacturers have seen their shares rise 67% in the past year, compared with the KSE-100 Index’s 30% gain. About 1,000 projects have registered under the government initiative with the boom just about to start on the ground, according to Mohammed Hassan Bakshi, a member of Khan’s Naya Pakistan Housing Program.
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Pakistani cement companies are investing to expand capacity a year after Prime Minister Imran Khan chose the construction sector to stimulate the economy.
Lucky Cement Ltd., Bestway Cement Ltd., and D.G. Khan Cement Co. are among more than half-a-dozen firms to announce plans in recent months. Pakistan’s cement production capacity will increase by 31% to 91 million tons after the announced expansions are completed, according to Insight Securities Pvt.
Khan’s government last year said it will subsidize low-cost housing and forgive tax evaders if they invest in construction projects. Banks have also been asked to increase their outstanding mortgages by at least 5% by December. Cement stocks have outpaced the nation’s benchmark index.
“Construction-related activities have a very, very big multiplier effect in emerging economies,” said Waleed Saigol, director at Maple Leaf Cement Factory Ltd. “The government has realized that the private sector has to play a leading role in getting the wheels turning again.”
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The construction boom is also having other effects. Pakistan’s consumer home finance, which is one of the lowest in South Asia, has increased by 18% to a record 97.8 billion rupees in May, according to Foundation Securities Pvt. The country has also seen its first real estate investment trust in more than six years.
The nation’s economic growth is “supported by a continued strengthening of domestic consumption and resilient manufacturing and construction activity,” Fitch Ratings Ltd. said in May. However, a fresh wave of Covid-19 cases “could disrupt the positive momentum.”
In a cement conference, conducted by AKD Securities Ltd CEO, Muhammad Farid Alam, on 15 September 2021, Pakistan's cement industry producers confirmed that the country has entered another expansion phase. The total installed capacity of the cement industry in Pakistan is currently at 69Mta, and a further 18Mta of capacity is in the pipeline. This will take total production capacity to 87Mta by FY24.
Atif Kaludi, CFO of Lucky Cement Ltd, Muhammad Rehan, CFO at Attock Cement Pakistan Ltd, Shamail Javed, CFO at Gharibwal Cement Ltd, and Inayatullah Niazi, CFO at DG Khan Cement Ltd verified that the next expansion phase was imminent.
In FY21 Pakistan's cement sales grew by 20 per cent YoY to 57.4Mt. For FY22 experts expect demand to grow by 10 per cent YoY. They estimated that if demand continues to increase by 10 per cent each year, the industry will reach 100 per cent capacity utilisation by FY26.
Lucky Cement
Lucky will incur capex of PKR23bn (US$136.99m) for its upcoming cement expansion, of which approximately 50 per cent is funded through Temporary Economic Relief Financing (TERF) and Long Term Financing Facility (LTFF) facilities. The development is expected to commence operations by December 2022, Atif Kaludi added.
Attock Cement
Cement expansion of 4250tpd is expected to come online by January 2024. Similarly, a solar plant of 20MW is expected to go online by October 2021, said Muhammad Rehan.
Garibwal Cement
According to Shamail Javed, GWLC's announced expansion is subject to board approval. If the board approves, it will take two years to start commercial production.
DG Khan Cement
The company is expected to start construction of a project from next year. The 10,000-14,000tpd is expected to come online by FY25. The total cost of the project is expected to be US$250m and will be financed through a combination of debt and equity, said Inayatullah Niazi.
https://www.thenews.com.pk/print/906340-cement-sector-pledges-to-decarbonise-pakistan
KARACHI: Pakistan Business Council (PBC) hosted a virtual session with British High Commission and Embassy of Italy to discuss the pathways for the decarbonisation of the country's cement sector.
This webinar comes at a time when the world leaders have huddled in Glasgow to discuss sustainability and growth without compromising everyone’s collective future. Speaking at the moot, Mike Nithavrianakis, British Deputy High Commissioner and Director of Trade, said, “Next to water, concrete is the second-most consumed substance on earth; on average, each person uses nearly three tonnes a year”.
According to Nithavrianakis, the concrete industry uses about 1.6 billion tons of Portland cement to produce 12 billion tons of concrete a year and accounts for 7-8 percent of greenhouse emissions. Ehsan Malik, CEO PBC, said, “The investment in infrastructure and the construction packages of the government will entail substantial increase in the use of cement in Pakistan, so we need to think about climate-resilient ways of production”.
Muhammad Ali Tabba, CEO Lucky Cement Limited and President of All Pakistan Cement Manufacturers Association said, “In a bid to achieve green growth going forward, the industry globally will have to adapt to climate change challenges and rework business models to ensure environmental stewardship and robust growth and the cement industry in Pakistan is committed to playing its role”. Faustine Delasalle, Co-Executive Director, Mission Possible Partnership and Director, Energy Transitions Commission explained, “There are essentially three routes, which need to be taken to meet the increasing demand whilst reducing emissions in the cement sector”. “The first being a need to relook at using materials efficiently, the second being improving energy efficiency and the third being employing new technologies to cut emissions,” Delasalle added.
According to the statement, Pakistan’s leading companies are also committing to reduce carbon emissions by disclosing their pledge openly. More than 28 companies from various sectors have signed the pledge letter to the ‘Business Ambition to 1.5 Degrees’ – and are ready to embark on the journey to reduce Carbon emissions to 50 percent by 2030.
https://twitter.com/haqsmusings/status/1504176499032616960?s=20&t=bRjXPJL-GLBVBoMhFkJVwA
Update on Pakistan, March 2022 - Cement industry news from Global Cement
https://www.globalcement.com/news/item/13839-update-on-pakistan-march-2022
(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.
https://www.lexology.com/library/detail.aspx?g=3df8a24e-6658-405c-ad66-d45e8874bf82
As of 2020, the federal government and all four provincial governments have passed PPP-specific legislation, formalising and enabling the regime, including by creating independent statutory bodies to facilitate, support and promote PPPs. At the federal level, the Public Private Partnership Authority (the PPP Authority) was set up in 2017 under the Public Private Partnership Authority Act, No. VIII of 2017 (the 2017 PPP Act). The PPP Authority replaced the Infrastructure Project Development Facility (IPDF), formed by the federal government in 2006 to facilitate PPPs. The 2017 PPP Act was subsequently amended through the Public Private Partnership Authority (Amendment) Act, 2021 (the 2021 Amendment Act), to create a more facilitative PPP regulatory framework and make it more amenable to private investment in development projects.
Traditionally, PPPs in Pakistan have been particularly common in the energy, power generation and transportation sectors. In fiscal year 2019–2020, 17 infrastructure projects involving private investment reached financial closure.2 The power sector made up the largest investment share with a total investment amount of US$5 billion.3 In recent years, though, the government has expressed a commitment to using PPPs in many more sectors including aviation, technology, healthcare, tourism and others. In late 2019, the Prime Minister approved a development plan, expected to run from fiscal years 2020 to 2023, termed the Public Sector Development Programme Plus (PSDP+) initiative, firmly orienting the government towards PPPs across sectors.4
In addition to the federal initiative, each of the four provinces – Sindh, Punjab, Balochistan and Khyber Pakhtunkhwa – has its own specific roster of projects and policies to promote PPPs. In accordance with the Constitution, PPPs in the areas enumerated in the Federal Legislative List fall within the domain of the federal government, while other areas generally fall under the domain of the provinces. This chapter focuses on the federal regime as exemplary of other models, but where relevant, also references the provincial regimes.
The year in review
According to information available on the PPP Authority's official website, at the federal level, 47 PPP projects are in the pipeline across sectors out of the 105 PSDP+ portfolio federal projects.5 Additionally, the PPP Authority lists a number of 'early harvest' projects that it is assisting with, including:
the construction of the Sukkur Hyderabad Motorway (expected cost around US$1.2 billion);
the construction of the Sialkot Kharian Motorway (expected cost around US$225 million);
the construction of a teaching and research hospital;
the construction of an innovations ecosystem (science and technology park);
the conversion of a guesthouse located in Lahore (the provincial capital of Punjab province) into a hotel;
the creation of a mass transit facility in a major city, the Karachi Circular Railway; and
the modernisation of the current Karachi–Pipri Rail Track.6
Previous projects finalised by the IPDF include:
the overlay and modernisation of the Lahore Islamabad Motorway (investment of US$460 million), which has been in operation since 2016;
the construction of the Lahore Sialkot Motorway (investment of US$438 million), which is in operation now;
the conversion of an existing four-lane super highway into a six-lane Karachi Hyderabad highway (investment of US$430 million), which has been in operation since 2017; and
the construction of the Habibabad Flyover (investment of US$8 million), which has been in operation since 2014.7
https://openknowledge.worldbank.org/handle/10986/12391
This final report is the fifth deliverable for the World Bank funded project 'operational design for the project development fund and for the viability gap fund'. Taking into account feedback and further consideration of issues rose in the previous Reports, it aims to: provide high level recommendations on the overall Public Private Partnership (PPP) framework in Pakistan, recognizing international best practice but also taking into account the specific Pakistan context and the challenges faced their-in; provide the analysis of the project pipeline for PPP projects in Pakistan, on the basis of consultations undertaken in Islamabad in May 2009; and design possible structures for the Project Development Fund (PDF) and for the Viability Gap Fund (VGF), that is informed by the current local enabling environment for PPPs, including the institutional capabilities and the existing pipeline of PPP projects. This final report incorporates feedback from the World Bank and the Government of Pakistan on each of the above-listed issues, which were set out and discussed in details in previous reports.
June 11, 2022
https://pkrevenue.com/pakistan-allocates-rs800-billion-for-fy23-psdp/
The country presented the federal budget 2022/2023, which envisages PSDP worth 800 billion rupees for the next fiscal year.
It has been centered on improvement in sectors such as water resources, transport and communication, energy, higher education, health, science and technology, and balanced regional development.
The emphasis of PSDP is also on revival of CPEC and related projects for inter-provincial and regional connectivity with equal importance to Special Economic Zones to promote trade, industrialization and create job opportunities.
The major thrust in the Information and Communication Technology sector including establishment and operations of Special Technology Zones.
Under the PSDP, the government has allocated 44.179 billion rupees including foreign aid of 1.3 billion rupees to the Higher Education Commission for implementation of 151 development projects.
The allocation indicates an increase of one hundred percent over the last year.
An allocation of over 197 billion rupees has been made for 117 power related projects.
These include hydro power generation projects such as Diamer-Bhasha, Mohmand, Nai Gaj and the fifth extension of Tarbela. Initiatives like developing water storages, automatic telemetry system, rainwater harvesting, decreasing water losses, ground water regulation and management would be undertaken in consultation with the stakeholders.
Over nine billion rupees have been earmarked for Ten Billion Trees Tsunami Programme Phase-I to achieve the target of planting 500 million trees.
Similarly, over 563 million rupees and over 1.2 billion rupees have been allocated for installation of weather surveillance radars at Multan and Sukkur respectively.
The Federal PSDP has also proposed an amount of 1.5 billion rupees to complete the emergent nature of small flood schemes all over Pakistan.
An allocation of 227 billion rupees has been made for strengthening efficiency of transport and logistics for domestic commerce and regional connectivity.
The high impact infrastructure projects to be completed under Public Private Partnership mode include Sukkur-Hyderabad Motorway, Sialkot-Kharian Motorway, Kharian-Rawalpindi Motorway, and Karachi Circular Railway. Under the CPEC, D I Khan-Zhob section is under discussion with the Chinese side for financing and it is expected to be launched in the next financial year.
The concessional financing agreement for landmark ML-1 project is to be finalized in the second quarter of the next fiscal year and subsequently arrangements will be made for groundbreaking of the project.
A comprehensive National Action Plan for agriculture modernization has been prepared in terms of capacity building, agricultural product processing technology extension, fishery science and technology, aquaculture and aquatic products processing.
https://www.finance.gov.pk/survey/chapter_22/PES03-MANUFACTURING.pdf
Total local dispatches during July-March FY2022 slightly decreased by 0.03 percent to
36.17 mt from 36.18 mt last year. While, total exports clocked in at 4.64 mt (-35.04
percent) against 7.15 mt during the same period last year. Local dispatches from the
northern region decreased by 2.27 percent, while southern region dispatches surged by
12.3 percent. Exports from the north nosedived by 64.5 percent, while south witnessed
fall of 24.3 percent growth during the period.
Cumulative dispatches (local & exports) posted a decline of 5.8 percent and reached
40.82 mt during July-March FY2022 against 43.32 mt in the corresponding period.
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Table 3.9: Cement Production Capacity & Dispatches (Million Tonnes)
Years Production
Capacity
Capacity
Utilization (%)
Local
Dispatches
Exports Total
Dispatches
2006-07 30.50 79.23 21.03 3.23 24.26
2007-08 37.68 80.14 22.58 7.72 30.30
2008-09 42.28 74.05 20.33 10.98 31.31
2009-10 45.34 75.46 23.57 10.65 34.22
2010-11 42.37 74.17 22.00 9.43 31.43
2011-12 44.64 72.83 23.95 8.57 32.52
2012-13 44.64 74.89 25.06 8.37 33.43
2013-14 44.64 76.79 26.15 8.14 34.28
2014-15 45.62 77.60 28.20 7.20 35.40
2015-16 45.62 85.21 33.00 5.87 38.87
2016-17 46.39 86.90 35.65 4.66 40.32
2017-18 48.66 94.31 41.15 4.75 45.89
2018-19 59.74 78.48 40.34 6.54 46.88
2019-20 63.63 75.14 39.97 7.85 47.81
2020-21 69.26 82.93 48.12 9.31 57.43
July-March
2020-21 69.26 83.41 36.18 7.15 43.32
2021-22 51.94 78.58 36.17 4.64 40.82
Source: All Pakistan Cement Manufacturers Association (APCMA)
3.5 Small and Medium Enterprises
Small and Medium Enterprises (SMEs) are indispensable to the progress of the nation as
it contributes significantly to the economic and social development of the country in a
myriad way: create employment opportunities, foster human resource development and
stimulate value addition to the economy.
To support SMEs to play their due role in economic development, Small and Medium
Enterprises Development Authority (SMEDA) has taken various initiatives.
Faseeh Mangi
@FaseehMangi
Pakistan’s 🇵🇰 D.G. Khan to Export Cement to U.S. for the First Time
The cement maker is in process to ship 50,000 tons of the building material to the US 🚢
https://twitter.com/FaseehMangi/status/1536770084437430273?s=20&t=VFvJN3p97vaPwA5DxNz6XQ
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In a first: Pakistan's D.G. Khan to export cement to US: report
Ship is being loaded at Karachi port for delivery to Houston, says CFO
https://www.brecorder.com/news/40180013
D.G. Khan Cement Company is in process to ship 50,000 tons of cement to the US, reported Bloomberg on Tuesday, a welcome development for Pakistan that is desperately seeking an increase in exports in the face of a widening trade deficit that has pushed the rupee to record lows.
Company CFO Inayat Ullah Niazi stated that a ship was currently loading cement at a port in Karachi for delivery to Houston, added the report.
The development comes at a time when the country's exports registered negative growth of 10.22% on a monthly basis in May 2022, clocking in at $2.6 billion from $2.897 billion in April 2022, according to latest figures released by the Pakistan Bureau of Statistics (PBS).
D.G. Khan Cement, one of Pakistan's largest cement makers, posted a 26% higher profit during the nine-month period that ended March 31, 2022 with earnings amounting to Rs4.1 billion. The company had posted earnings of Rs3.25 billion in the same period of 2020-21.
In 2020, DG Khan Cement won orders for export of cement to the Philippines.
Meanwhile, in a report published earlier, JS Global analyst Muhammad Waqas Ghani stated that continuously rising coal prices and rupee depreciation have led to the procurement of coal at higher rates by cement manufacturers, requiring them to raise domestic prices by Rs40 per bag during the last few weeks.
With an almost 50% (Rs300 per bag) increase in the last 12 months, further price increments would be needed to neutralise the coal cost impact, if prices remain elevated, added Ghani.
"If coal prices stay at these high levels, 4QFY22 profitability will likely be impacted given higher average cost of coal inventory."
https://www.globalvillagespace.com/pakistans-cement-exports-fall-by-43/
According to the dispatch split, northern-based mills shipped 39.44Mt of cement domestically during the FY21–22, which is 2.8% less than the 40.58Mt shipped during the FY20–21. From FY21–22 to FY21–22, the north’s exports decreased by 64.5% to 910,685t, compared to 2.56Mt exported in the prior fiscal year.
Domestic shipments by southern-based mills in FY21–22 totaled 8.19 Mt, up 8.7% from 7.53 Mt of cement in the prior fiscal year. However, exports from the southern zone had a significant reduction of about 35.6%, falling from 6.74Mt in the fiscal year to 4.34Mt in FY21-22.