ISLAMABAD:
The Competition Commission of Pakistan’s (CCP) new cement sector study has advocated tax, logistics, energy and mineral reforms to boost competition, cut structural distortions and unlock long-term growth in one of Pakistan’s key industrial sectors.
The report titled “Competition Assessment Study of the Cement Sector in Pakistan,” addresses competition-related challenges in the cement sector. It outlines recommendations to foster competition and improve efficiency. Pakistan’s manufacturing sector remains a cornerstone of the national economy, with large-scale manufacturing (LSM) contributing approximately 67.5% of total manufacturing output and nearly 8% to the national GDP.
Within this framework, the cement industry plays a pivotal role, accounting for around 1% of GDP and serving as a fundamental input for infrastructure development and housing sectors that are vital for sustained economic expansion. Despite its strategic importance, the sector has recently experienced a slowdown. During FY2025, domestic consumption declined in both the northern and southern regions. This trend reflects broader macroeconomic pressures and subdued construction activity.
Moreover, the report notes that Pakistan’s per capita cement consumption remains significantly below the global average, indicating substantial untapped growth potential. The study identifies a combination of structural, regulatory and strategic barriers that collectively constrain market contestability and distort competitive outcomes. Structural factors such as high capital intensity, water scarcity in mineral-rich regions, low shelf life of cement, high transportation costs and pronounced seasonal demand fluctuations naturally limit entry and expansion. These challenges are compounded by regulatory and policy-induced distortions, including 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 a heavy and multi-layered tax burden. In addition, 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 and coordinated reform agenda aimed at restoring competitive neutrality and reducing barriers to entry and expansion in the cement sector. It emphasises the need to promote the development of the mineral sector so that new cement capacity can be established and the industry’s long-term growth potential can be fully realised. The study further calls for harmonisation of axle-load enforcement across provinces, supported by modernisation of logistics systems, in order to improve transportation efficiency and eliminate cost distortions.
In addition, it highlights the importance of aligning provincial limestone royalty regimes through a uniform, transparent and predictable framework so that all market players operate on a level playing field. The introduction of competition in coal handling infrastructure at ports is also recommended to reduce reliance on limited facilities and to enhance operational efficiency.
To provide greater certainty to investors and reduce unpredictability, the report stresses the need for a stable tax policy through a medium-term framework. Finally, it recommends rationalising energy pricing by adopting cost-reflective tariffs and time-of-use mechanisms.
