Industry alleged policymakers for destroying steel units

Islamabad: The iron and steel industry in Pakistan on Thursday alleged the bureaucracy and policymakers for destroying the steel units in the private sector.

While addressing a press conference, representatives of iron and steel associations criticized the policymakers and government functionaries for inefficiencies.

Addressing a press conference here, the major players in the iron and steel sector said that mixed planning and lack of regulatory oversight created distortions in the industry.

“The capacity of Pakistan steel was only 1.2 million tonnes per annum and the government could not run it,” said Mian Akram Fareed, Vice president FPCCI,

“But the production of only Mughal and Amreli steel was more than 2 mn tonnes annually, and instead of respecting the private sector the officials were creating disturbances for the investors.”

The steel industry demanded that the decision to abolish Federal Excise Duty to around 40 units located in former Federally Administered Tribal Areas (Fata) will damage the whole sector.

“Just because the tax exempted goods are sold in the major markets across the country, the main industry was making losses,” said Abbas Akberali, Patron –in –Chief, Pakistan Association of Large Steel producers.

He informed that his own company operated at total capacity and made record sales but still lost to around Rs1.7 bn in the last financial year.

“It was due to price distortions and when cheap products are available in the markets, we are forced to lower the rates or opt for a shut down,” he said.

He highlighted that after abolishing the FED for units in former Fata, the products from that part would be cheaper by up to Rs27,000 per tonne.

Meanwhile, Javed Mughal of Mughal Steel Mills, Lahore, said that in the last fiscal year, importers imported around 0.5 million tonnes of duty-free scrap for the units in Fata, and the electricity bills show that they made only 100,000 tonnes of steel products.

“Now the issue is where did rest of the scrap go, and most importantly how much of iron and steel products were consumed in Fata areas,” Mr. Mughal added, “Besides the officials were promoting tax fraud culture this way.”

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The other speakers said it would contain investments and growth in the steel sector if the price distortions in the steel industry continued.