Construction of Diamer Bhasha Dam to boost cement sector growth

LAHORE: The construction of Diamer Bhasha Dam will boost the cement sector growth, as the building of the dam will consume approximately 5 million tons of cement per annum. This ostensibly provides an opportunity to all cement companies to enhance their existing local cement dispatches, experts said.

According to them, the Asian Development Bank (ADB) has formally informed Pakistan that it is ready to shell out $4.5 billion for the construction of the Diamer Bhasha Dam, which is so important to Pakistan’s energy mix. This is expected to improve country’s water storage capacity and enhance hydropower generation capacity thereby boosting economic growth.

The cement sector is already building its forte in local markets and this event will further enable it to augment its existing sales thereby facilitating it to counterfeit the decrease in exports.

Fauji Cement will tend to benefit the most. This is because it has a greater proximity to the area of construction and also owing to the fact that it always gets orders for Chinese undertakings. Thus it will make Fauji the biggest beneficiary. The 5mn tons of cement consumption by the dam is more than sufficient to perk up FCCLIs local sales.

It is expected the construction of the dam to increase Fuji’s cash base for the FY12 making it look more attractive to the investors. Experts anticipate FCCL to increase its earnings as the new German plant with a clinker capacity of 7200 tons per day will also commence its cement section by the end of FY11 thereby almost doubling FCCLIs capacity. The new plant combined with the dam construction opportunity will surely boost FCCLIs sales enabling it to earn high revenues. Moreover it is also expected the cost of production to decrease on account of the Refused Derived Fuel which is expected to show results in the coming years.

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