Pakistan Association of Large Steel Producers (PALSP) has raised their strong concerns with Prime Minister Imran Khan and other ministers for offering heavy government subsidies and special concessions to revive Tuwairqi Steel Mills without addressing concerns of the local steel industry. It said the Tuwairqi Steels will not be viable in the export market due to its low output despite massive power, gas concessions.In a letter written to PM Imran Khan, Advisor to PM on Finance Dr Abdul Hafeez Shaikh and Advisor to PM on Commerce Abdul Razak Dawood, Wajid Bukhari Secretary General PALSP stated that while it is good to design policies that help revive industry and incentivize investment, we must see the pros and cons of each policy initiative as well as the cost and benefit analysis. Our association is of the impression that this project is being pushed with great haste and by ignoring the tenets of meritocracy of the PTI Govt. We have already communicated our concerns on the subject project, and wish to reiterate and submit it again. They stated that at full capacity, Tuwairqi Steel Mills would be getting a subsidy of almost Rs 13.2 billion per annum from the government including subsidy on gas and income tax exemptions. Tuwairqi’s product, DRI, would try and replace imported scrap but import substitution numbers would be negative i.e. major components of DRI manufacturing are RLNG and iron ore, which are both imported products. Moreover, import substitution will only be done partially because technology predominantly used in Pakistan for steel making can only process maximum 20% of gas based DRI, the balance will still have to be imported scrap. Given that many DRI exporting countries are those where gas prices are in the range of $ 2.5 and may even have iron ore available domestically, it doesn't seem that Tuwairqi Steels will be viable in the export market even after subsidized gas is available to them at USD 4.65 per MMTBU.
Source :https://www.thenews.com.pk/print