The Competition Commission of Pakistan (CCP) has issued a detailed sector review highlighting structural issues in the country’s cement industry, arguing that rising prices are being driven less by market forces and more by heavy taxation and policy weaknesses.
The report states that taxes and various government duties now make up as much as 38 percent of the final cement price, meaning a significant share of what consumers pay goes directly to the state rather than production costs or industry margins.
It notes a sharp increase in cement prices over time, with a 50-kg bag rising from around Rs. 822 to about Rs. 1,100.
Despite expansion in production capacity over the years, the industry is operating at only 53 percent utilization, mainly due to sluggish demand and inefficiencies. Cement demand has reportedly weakened across both northern and southern markets.
The CCP also raised concerns about market structure, especially in southern Pakistan, where a small number of large firms hold significant control. It further pointed to issues in coal imports, suggesting that restrictive or concentrated sourcing practices are pushing up manufacturing costs.
According to the findings, regulatory differences between provinces are also distorting competition. Variations in transport rules, axle-load limits, and mineral royalty regimes are creating uneven cost structures for producers across regions.
The report additionally flagged the presence of smuggled and substandard cement in local markets, warning that it could compromise construction quality and public safety.
Describing reforms as “unavoidable,” the CCP urged a broad policy overhaul, including tax rationalisation, improved energy pricing, and updated regulatory frameworks. It cautioned that without swift action, construction costs are likely to rise further.
The commission has recommended a wider reform plan aimed at improving competition, lowering entry barriers for new investors, and supporting expansion in the sector, along with better development of the country’s mineral resources.
It concluded that decisive policy intervention is necessary to bring down costs, improve efficiency, and strengthen competition in the cement industry, warning that delays could slow economic growth and worsen housing affordability challenges.
