OUR STAFF REPORTER KARACHI - A recently-concluded fiscal year 2010-11 proved to be a nightmare for the cement sector as 80 per cent of the cement manufacturers suffered huge losses on the back of stagnant local consumption and government failed to honour its commitment for payment of inland freight subsidy that could have boosted exports. This was stated in a press release issued by All Pakistan Cement Manufacturers Association here on Monday. Cement consumption declined by 8.24 per cent during the fiscal year 2010-11 as compared to the last year which has rung alarm bells for the industry and planners of the country. Cement despatches for FY 2010-11 reveal that capacity utilization of the industry was at its lowest at 76.12 per cent in past eight years with total despatches declining by 6.68 per cent to 21.97 million tons, down from 23.55 million tons in 2009-10. Low consumption of cement mirrors low growth of GDP of the economy. A spokesman of the APCMA stated that continuous losses to cement industry are unbearable and might jeopardise the servicing of Rs 132 billion in loans the industry owes to the banking sector. Cement industry has been incurring massive losses due to high cost of production, declining exports and slack local demand of the commodity but the government ignored all the issues of cement makers and no support was extended to the ailing industry, he highlighted. According to the data for FY2010-11, the cement industry remained particularly challenged and under pressure in the northern part of the country, while the few plants operating in the south were relatively better off. The 19 cement units in the northern region have cumulative production capacity of 36.17 million tons. These units despatched only 17.892 million ton of cement in FY2010-11 which was less than 50 per cent of their installed capacity. In 2009-10 these units despatched 11.22 per cent more cement amounting to 20.154 million tons. The total installed capacity of the 5 cement plants in the south is 6.381 million tons. These units despatched 4.083 million tons of cement in FY2010-11 which is 20 per cent more than the cement despatches of 3.396 million tons, a year earlier in 2009-10. This lopsided development in different geographical regions of the country was mainly due to closeness of the plants in the south to the sea ports that enabled them to export at least some of their production. This is not feasible for the large number of mills in the north due to high transportation cost. Another point worth noting is that the domestic uptake of cement increased in Sindh (South) that offset the impact of lowered exports last fiscal. Law and order issues in the north may also have impacted adversely, sales of cement in this region. The woes of the plants based in the north were compounded by reduction in domestic demand in northern parts of the country and inability to achieve breakthrough in land exports to India. Overall, exports declined by 11.69 per cent while the total despatches of cement trimmed by 6.68 per cent. He further said that two years back government agreed to share transportation cost from mills to sea port. This, he added, boosted exports and provided some relief to the industry but it is regrettable that the promised support was never provided. Even in the current budget, there is no mention to release long-awaited inland freight subsidy of Rs 270 million to the cement makers which has added to the problems of the industry, he stated with dismay. He recalled that the ECC and TDAP had approved inland freight subsidy on export of cement by sea. Accordingly, the government issued a public notice dated March 26, 2010 allowing inland freight subsidy at the rate of 35 per cent on cement exports till June 30, 2010.