Cement companies to pay 6% royalty after court ruling

June 16, 2025 (MLN): A larger bench of the Lahore High Court has ruled against cement manufacturers in a key royalty case while directing them to pay royalty charges based on 6% of the ex-factory price of cement.

The decision dealt a blow to the industry’s legal pushback against the Punjab government’s revised levy.

The decision followed months of litigation after the Punjab government, on August 2, 2024, raised the royalty rate on limestone, a key raw material for cement, from Rs250 per ton to 6% of the ex-factory price of cement or clinker.

The move aimed to boost provincial revenues but faced immediate resistance from manufacturers.

Later that month, Punjab-based cement companies secured a stay order, subject to furnishing bank guarantees, allowing them temporary relief from the hike.

However, with today’s court ruling, the companies will now be required to comply with the revised formula.

Industry participants are expected to challenge the verdict in the Supreme Court, people familiar with the matter said, requesting anonymity as the decision-making process is ongoing.

The royalty increase, now legally enforceable, may pressure margins in the cement sector, particularly for firms with large operations in Punjab.

The ruling adds to headwinds for the industry already grappling with subdued construction demand, high energy costs, and elevated interest rates.

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