FINANCE

 
1- 5PC INCREASE IN GAS CHARGES
2- PTCL PRIVATISATION PLAN DELAYED
3- PAKISTAN STEEL SEEKS TARIFF PROTECTION
4-
PUBLIC OFFERING OF UNITED BANK SHARES
 

PAKISTAN STEEL SEEKS TARIFF PROTECTION

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From KHALID BUTT, Lahore
June 06 - 12, 2005
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Elaborating the proposed privatization of Pakistan Steel, the Chairman said that all stakeholders would be taken into confidence before finalizing such a big decision. The Chairman said that the government would take firm commitment from any strategic buyer to give undertaking for essential investments in the revamping of the plant and its subsequent expansion.

Pakistan Steel Mills in a proposal moved to the government has proposed for a tariff protection, which it feels has become inevitable in the wake of influx of steel products from oil rich Gulf countries including Iran who can produce steel at highly competitive price as compared to the cost of steel production in Pakistan.

This was revealed by Lt. Gen. (R) Abdul Qayyum, Chairman Pakistan Steel Mills (PSM) at a meeting with the business community at Lahore Chamber of Commerce and Industry where the end users of the steel products from upcoming engineering centers of Sialkot, Gujranwala, Faisalabad and Lahore were assembled to share the problems confronted to the engineering sector specially rocketing steel prices with the Chairman.

The steel industry produces around 3 million tonnes of steel products as against the total need of over 4 million tonnes a year. Though the Pakistan Steel was working on its expansion plans to enhance production capacity from one million tonnes to 3 million tonnes, yet the country facing a net shortfall of over 1 million tonnes offering a lucrative market to the steel producing countries.

Gen. Qayyum, however, observed that in a bid to promote industrial growth, Pakistan Steel has established a Downstream Industries Park in the vicinity of the steel complex for the entrepreneurs intended to setup their units based on product/byproduct of Pakistan Steel. Pakistan Steel has been able to attract a large number of potential investors with as many as 40 applications which are currently under process for allocation of 500 acres of land.

Lt Gen (R) Abdul Qayyum said that the price pattern of Pakistan steel products was drawn on the basis of international price trends because of its heavy dependence on imported raw material. Since 75 percent of the domestic needs are met through imports and ship breaking industry, domestic price structure is fully dominated by the international factors. Pakistan Steel has huge fabrication potential, which can be used by engineering industries in Pakistan. About Iron Ore, the Chairman said that the development of Iron Ore mines is the sole responsibility of provincial authorities under the guidance of the federal government.

 

 

Pakistan Steel is anxiously awaiting supply of indigenous iron ore from our own resources to save huge freight charges and import costs. Iron ores with lesser iron contents are counterproductive and result in losses than gains, the Chairman explained.

Regarding financial health of Pakistan Steel, the Chairman informed that Pakistan Steel was under debt of Rs19 billion besides accumulated losses of over Rs9 billion in 1999. The situation is altogether different now as the mill is a going concern, making profits and contributing significantly to the government revenues.

Speaking on the occasion, Mian Misbah-ur-Rehman, President Lahore Chamber of Commerce and Industry appreciated the economic turnaround in the Pakistan Steel reflected in the record-breaking performance during 2003-04. Inviting attention of the Chairman Pakistan Steel towards some issues faced by the steel industry, the LCCI President pointed out that the continued decline in international price of MS billet from $426 to $340 per tonne is badly affecting the dealers of Pakistan Steel. Imported billet of better quality is available in the market at a lending price of around Rs28,000/- per tonne after paying all taxes as against steel mill ex-factory price of Rs33,000/- per tonne including sales tax. It is necessary to provide shelter to the local industry producing two million tonnes steel billet and Pakistan Steel producing only three lac tonnes annually. The situation calls for enhanced duty on imported billet with a view to save the local melting industry.

There is a dire need of a level playing field for all the stakeholders dealing with the Pakistan Steel, the LCCI chief observed. More than 80 percent products of the PSM consumed by the industry operating from upcountry destinations, but they have to pay ex-Karachi prices which include additional cost of freight. This price differential gives a price edge to the end users located in Karachi.

Like uniformed prices of petroleum products which are being sold at a flat rate for the whole country, similar price mechanism for the steel products as well, Misbah suggested. Pakistan Steel should ensure availability of products at important consumption points by setting up of steel depots at Lahore and other vital points.

Lahore office of the Pakistan Steel Mills also needed to be computerized to display the unsold inventory of the mills through online facility so that local buyers could place orders as per availability of inventory without any delay.

The meeting was also addressed by the LCCI President Mian Misbah-ur-Rehman, Senior Vice President Sohail Lashari, Vice President Sheikh Mohammad Arshad, former Presidents Iftikhar Ali Malik & Mian Anjum Nisar.

Elaborating the proposed privatization of Pakistan Steel, the Chairman said that all stakeholders would be taken into confidence before finalizing such a big decision. The Chairman said that the government would take firm commitment from any strategic buyer to give undertaking for essential investments in the revamping of the plant and its subsequent expansion.