News Desk |
One of Pakistan’s leading cement producers, Power Cement Ltd. has completed the financing arrangements of Rs24.9 billion ($205 million) for the 2.5Mta expansion of its cement plant in the Nooriabad Industrial Area, Kalo Kohar District, Jamshoroo, Sindh.
On completion of this expansion, Power Cement will be the second-largest producer in the Southern Region by May 2019, with a total capacity of 3.4Mta, said Power Cement’s CFO, Tahir Iqbal.
Read more: Pakistan Cement exports surge as it shows highest capacity utilization
The breakdown of financing includes equity of Rs. 1.3 billion by foreign investors such as The Investment Fund for Developing Countries (IFU), IFU Investment Partner K/S and FLSmidth. Equity of Rs7.4 billion has been retained by local shareholders for subscribing to right shares.
Other than equity, local investment includes PKR12.1bn, financed by National Bank of Pakistan, Habib Bank Ltd, Faisal Bank, Bank of Punjab, Al Baraka Pakistan Ltd, Bank Alfalah, Dubai Islamic Bank, Askari Bank, First Oman Investment Co and First Credit and Investment Pakistan Ltd.
APCMA urged the government to withdraw the recent increase in Federal Excise Duty (FED) which will hurt local consumption as this will have an impact of PKR15/bag, thereby raising the cost of construction.
Investment worth PKR4.1bn is being financed by overseas organizations, including the Islamic Corporation for the Development of the Private Sector (Saudi Arabia), OFID, OPEC Fund for International Development (Austria) and DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbh (Germany).
Read more: Pakistan cement sees record 11 month production run despite Ramadan
Equipment is being supplied by FLSmidth Europe while TEPC China is working as the construction contractor.
Pakistan’s cement industry has received a net foreign direct investment (FDI) of US$54.1m in July 2017-May 2018, up 63 percent when compared with July 2016-May 2017 when FDI reached US$33.3m, according to data published by Pakistan’s central bank, the State Bank of Pakistan.
On completion of this expansion, Power Cement will be the second-largest producer in the Southern Region by May 2019, with a total capacity of 3.4Mta, said Power Cement’s CFO, Tahir Iqbal.
Overall investment including other sectors slipped from US$2.5bn to US$2.47bn over the same period. According to Pakistan’s Federal Bureau of Statistics, the large-scale manufacturing sector posted 6.13 percent growth in the first 10 months of FY17-18 (July 2017-April 2018) as the construction boom continued to drive the consumption of cement and steel, while other sectors also recording growth.
Local cement industry production was recorded at 35.015Mt during this period from the 31.116Mt produced in 10M16-17, representing a YoY growth of 12.5 percent. This trend was also observed in April 2018, when industry produced 3.787Mt of cement compared to 3.335Mt in the same month last year. This translates to a growth of 13.4 percent.
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A spokesperson of APCMA, the country’s cement producers’ association, expressed hope recently that local cement consumption will once again rise after Ramadan while the continuous increase in exports is a welcome sign for the industry. However, the major factor behind the rise in exports is the decline in the rupee value against the US dollar that improved the competitiveness of cement sector in the global markets.
APCMA urged the government to withdraw the recent increase in Federal Excise Duty (FED) which will hurt local consumption as this will have an impact of PKR15/bag, thereby raising the cost of construction.