KARACHI - Cement manufacturers have reduced the supplies of cement in the local markets and created shortage, while taking the advantage of this shortage, cement retailers have started fleecing people by charging extra amount, The Nation learnt. Cement dealers said that they cement is in short supply at the moment and retailers are charging extra amount ranging between Rs20-30, resultantly the price of per 50kg cement bag reached to Rs400 in the retail market. Interestingly, cement manufacturers have raised the cement prices range from Rs40 to Rs50 so far on the pretext of increase in Central Excise Duty (CED) in the budget09. However, Cement manufacturers had to raise prices of cement to Rs7.5 per bag in order to mitigate in the CED rise but they had increased Rs30 on per bag in two days after the budget, cement dealers maintained. Cement dealers said that cement manufactures have focused on cement exports because CED is not applicable on export. On the light of this condition shortage of cement has emerged and the situation reflects that government has no writ in this sector. Cement prices on Thursday stand at Rs320-360, while retail prices jumped up and reached to Rs400. Meanwhile, cement dispatches have jumped up by 24.3 per cent and reached to 30.1 million tons in FY08 as compared to 24.2 million tons in FY07. Local dispatches rose by 6.1 per cent to 22.4 million tons while exports showed a robust increase of 142 per cent to land at 7.7 million tons, data released by All Pakistan Cement Manufacturers Association (APCMA) said. Analysts attributed the significant increase in cement exports to the cement shortage in India and UAE. While private constructions projects are increasing resulting in healthy demand for cement in the local market. A record cement sale of 11.4 tons was witnessed on both local as well on export front in the last four months from March to June of FY08 on the back of soaring regional prices, and the peak local demand season of cement that kicked off in March. In first eight months from July to February of FY08, cement sales have demonstrated a healthy demand of 23 percent with dispatches of 18.7 million tons. Cement dispatches during July-May FY08 have increased from 22 million tons to 27.2mn tons, up by 24 per cent. Local sales rose by 7% from 19.2mn tons to 20.5mn tones while exports grew by a massive 143% to land at 6.8mn tons. The primary source of overall cement growth in FY08, was an unprecedented increase in exports, owing to the supply shortage in India and Middle East which has prompted rocketing cement prices in the region. Pakistani cement companies, due to their excess capacity, focused on export to neighboring countries such as Middle East, Africa, Afghanistan and India where they are getting a price premium, analysts said. A record PSDP amount of Rs549.7 billions set in budget 2008-9 is positive for the cement makers as it would keep cement demand growth strong. Moreover, higher allocation of funds for infrastructure development projects especially dams, road networks and highways along with building of low cost housing units will escalate cement demand during FY09. However, revenue starved government has increased CED on local cement sales from Rs750 per ton to Rs900 per ton. Resultantly local cement producers have passed on the impact of CED rise on to the consumers through cement price increase. "Higher PSDP allocation with rising exports, support cement sector's volume growth in FY09," analysts maintained. "With private sector construction activities on a boom, sizeable PSDP allocation for infrastructure projects in Budget FY09 and regional cement shortage, cement demand is likely to remain buoyant. As a result, we expect cement sales to increase by 11 percent in FY09 to reach 33.0mn tons mark, 74% capacity utilization," analysts said. Pakistan cement industry brought in 5.84mn tons of new capacity taking the total cement capacity to 36.1mn tons. This includes DG khan's new khairpur plant & Maple leaf's new production line of 2.1mn tons each and some other additions of 1.8mn tons. Lucky Cement with its 2 new lines of 1.26mn tons capacity each and Fauji Cement with its 2.1mn tons new line are expected to come online. With these additions and other expansions, total industry installed capacity is expected to reach 49.1mn tons per annum by FY10, analysts said.