The Competition Commission of Pakistan’s (CCP’s) recent report on the cement sector is yet another reminder of the open hand given to different industries to exploit the public and governmental laws for their massive profit-taking schemes. The fresh inquiry report on the cement units reflects the wrongdoings of the North Zone of All Pakistan Cement Manufacturers Association (APCMA) as the Sindh High Court did not allow the CCP to use material collected from the raids at offices of cement companies in South Zone (Sindh). The report covers 24 plants, which are owned by 16 companies in the country. These plants produced 47.8 million tones altogether of cement in 2019-20 financial year. Still, the glaring findings of the reports, if generalized, give an insight into the cement cartels. The inquiry report relies on the forensic audit and findings by the Federal Investigation Agency’s (FIA’s) collected from the offices of cement companies and the APCMA head office in Lahore. In a way, the report is based on cement factories’ owners’ discussions in social media platforms, such as “WhatsApp”, which reveal how these counterparts in the sector but brothers in cartelization have been exploiting production quota distribution based on installed capacity from 2014 to 2020. The inquiry report, issued this week, exposes the cement manufacturers’ ploy to “maintain a dispatch/ sale quota” and that how the association stopped the sale of cement exceeding their allocated quota with the help of the staff manning various cement units. The cement manufacturers worked as a group on issuing maximum retail price and would take collective decisions to trickle down the heavy impact of the input cost to the consumers. The penny by penny earned from each bag ended up in an extra Rs 40 billion paid by the consumers to the manufactures when a cement bag price went up by Rs 50 in May, June, and August this year.
Cement manufactures have used even the slightest excuse to increase the price. For example, when the government implemented the axle load in July 2019, the factories saw it as a reason for high freight cost. They increased the price. Similarly, when in 2020, the demand went down, they again used this pretext to increase the price. The frequent price change would have alerted the CCP to launch a probe into the cement manufacturing affairs, but it acted in April this year. The report, however, is a welcome step. It is the time the government implemented the report.
