Hiked royalty rate in KP to increase cement prices

PESHAWAR: The Khyber Pakhtunkhwa government’s decision to increase royalty will boost the cement prices, as the province is home to several top producers.

For the next fiscal year 2025-26, the provincial government has fixed the royalty rate at 10 per cent. This move will automatically raise the cement prices for consumers, thus adversely affecting the construction sector by further increasing the cost.

Currently, the Minerals and Mines Department is collecting Rs350 per tonne as royalty, which will reach Rs385 with effect from July 1.

Read more: KP govt tables Rs2,119bn budget, relying heavily on Centre

But it is a “five-year plan”, not limited to 2025-26. That’s why the cement royalty will witness another 10 per cent hike in 2026-27.

Meanwhile, Khyber Pakhtunkhwa is going to increase royalty on cement by 7.5 per cent in the next three fiscal years – 2027-28, 2028-29 and 2029-30.

What is the net result?

The cement royalty in 2025-26 will be Rs385 per tonne, followed by Rs424 in 2026-27, Rs456 in 2027-28, Rs490 in 2028-29 and Rs527 in 2029-30.

Hence, the move is going to keep the cement prices raising automatically annually during the next five years.

According to the All Pakistan Cement Manufacturing Association, 10 cement plants are currently functioning in Khyber Pakhtunkhwa. These include the likes of Kohat Cement, Cherat Cement, Askari Cement and Lakki Cement.

Each of these units are producing 18,000 to 20,000 tonnes of cement daily, while over 100,000 tonnes of are exported to Afghanistan monthly.

Meanwhile, the decision to raise the cement royalty is an attempt to reduce dependence on the National Finance Commission (NFC) Award, as Khyber Pakhtunkhwa has failed to generate revenue even after the 18th Amendment.