20000316

IFC offers financial support to three cement industries

TAHIR DHINDSA

ISLAMABAD: The International Finance Corporation has agreed to participate in the financial restructuring process of Maple Leaf Cement, D G Khan Cement and Fauji Cement, sources told Business Recorder.

To discuss various financial restructuring proposal, prepared by IFC in consultation with said concerns, a meeting was held between IFC and Chairman Security and Exchange Commission of Pakistan (SECP) on Wednesday.

Being the regulator, the SECP is supervising the whole operation.

Sources said, IFC has decided to reschedule its loan to these three cement giants after finding out that all of these three concerns were viable and internally sound and in the light of the prevailing macro-economic situation in the country they need assistance.

All these three cement manufacturers are up-to-date on payment of interest on their loans, but with the financial restructuring they will be provided more space to plan ahead.

They said if the cement industry is allowed to fall it will ruin Pakistan's financial sector with it. Sources suggested a uniform sales tax system for the cement industry.

Earlier, the previous government had allowed sales tax concession to Lucky Cement, Bestway Cement, AWT Cement and Pakland Cement but later it also allowed the similar concessions to rest of the industry. Now the government is looking forward to impose sales tax on all sectors. The four cement manufacturers are pushing the government to adopt a double sales tax system where the four industries should enjoy tax concessions, while the rest should be put under sales tax regime.

Sources close to IFC said, if the government bows to their demand it will destroy the cement industry, banking sector and affect federal revenue collection, as 68 percent of sales prices of cement is subject to excise duty collected by the federal government.

They further said in Pakistan per capita cement consumption is about 71 kg which should be about 110 kg annually. The industry's problems have been further aggravated by furnace oil price hike, which during the last seven months have gone up to Rs 9,500 from Rs 6,000.