CCP Releases Cement Sector Report, Calls for Market Reforms

The (CCP) has released a report titled “Competition Assessment Study of the Cement Sector in Pakistan,” addressing competition-related challenges within the sector. The report outlines recommendations to foster competition and improve efficiency.

Pakistan’s manufacturing sector remains crucial, contributing 67.5% of total manufacturing output and nearly 8% to national GDP. Within this framework, the cement industry accounts for about 1% of GDP and serves as a fundamental input for infrastructure development and housing sectors vital for economic expansion.

Despite its strategic importance, the sector has slowed down in FY2025, with domestic consumption declining in both Northern and Southern regions. This trend reflects broader macroeconomic pressures and subdued construction activity. Moreover, Pakistan’s per capita cement consumption is significantly below global averages, indicating substantial untapped growth potential.

The study identifies structural, regulatory, and strategic barriers that constrain market contestability and distort competitive outcomes. Structural factors include high capital intensity, water scarcity in mineral-rich regions, low shelf life of cement, high transportation costs, and pronounced seasonal demand fluctuations. These challenges are compounded by uneven enforcement of axle-load limits across provinces, significant disparities in provincial limestone royalty regimes, monopolistic dependence on a single coal-handling terminal at the port, and heavy tax burdens.

Recent levies on fuels used by captive power plants have sharply increased energy costs, undermining industrial efficiency. Weak border controls enabling smuggling and the prevalence of counterfeit cement further erode competitive neutrality, disadvantage compliant manufacturers, and raise concerns regarding quality, safety, and revenue leakage.

To address these challenges, the report proposes a comprehensive reform agenda aimed at restoring competitive neutrality and reducing barriers to entry and expansion in the cement sector. It emphasizes promoting the development of the mineral sector for new capacity establishment and long-term growth potential realization. The report also calls for harmonizing axle-load enforcement across provinces, modernizing logistics systems to improve transportation efficiency, aligning provincial limestone royalty regimes through a uniform framework, introducing competition in coal handling infrastructure at ports, ensuring stable tax policy through medium-term frameworks, and rationalizing energy pricing with cost-reflective tariffs and time-of-use mechanisms.

The CCP will continue working with stakeholders to develop pro-competition reforms promoting competition and long-term sustainability in the cement sector, aligning with international best practices. The report is available on the CCP’s website.