Tuwairqi Steel offers 7pc equity to govt
KARACHI: Tuwairqi Steel Mills Limited (TSML) is ready to transfer seven per cent equity to the government as soon as the project becomes viable.
The project that was commissioned in May 2013 had to suspend production in November same year as the decision on the supply of feedstock gas at a concessionary rate could not be reached.
TSML Country Head Zaigham Adil Rizvi informed Dawn on Saturday that the Saudi and Korean parent companies of the joint venture had formally endorsed the proposal but linked it to swift decision on the feedstock gas rate.
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He said all systems are in place and the mills can start production within a month after a favourable decision on its key raw material.
“The delay is not an option now as the company cannot afford to wait. We intend to announce our pull-out schedule next week in case the government remains indecisive. We have already retrenched some contract workers but sustained about 1,100 regular workforce for 10 months but it would not be possible if we decide to pull-out,” he said.
The TSML is a joint venture of Saudi Arabia’s Al-Tuwairqi Group of Companies and S. Korea’s Pohang Steel (Posco).
The mill wants gas tariff at around Rs123 per million British thermal units (mmBtu) for at least five years against prevalent industrial rate of Rs588 (Rs488 sale price + Rs100 GIDC). The concession, if approved, would translate into a yearly subsidy of Rs5 billion.
According to details collected from relevant sources privy to Economic Coordination Committee meetings all relevant ministries have agreed to grant the concession but some are more supportive than others. While the ministry of industries and Privatisation Commission seem more enthusiastic to settle the issue, the ministries of finance and petroleum are not particularly keen to deal it on priority.
The delay is irking Tuwairqi, which says it has already suffered losses of millions of dollars because its Direct Reduction of Iron (DRI) plant stands idle for nearly a year.
“Maybe they’re not aware of the intensity of the situation. The matter warrants personal attention of the prime minister and finance minister to ensure the revival of steel industry that has potential to kick start the next round of industrialisation in Pakistan with support of global player like Posco.”
Miftah Ismail, chairman of the Board of Investment, was optimistic that Tuwairqi would not pull-out, and the matter would soon be resolved. When asked how much time the government would take to reach a decision, he said: “It’s a bitter pill. Give the government some time to swallow.”
For Ismail, the pill is still bitter even after the sweetened offer of the TSML to surrender 7pc equity, or 58.8 million shares. “Though we hope Tuwairqi prospers in the future, the stake offered is not much in its current status”.
Meanwhile, a government official, who wished to remain anonymous, said that the TSML was to blame for where things stand today. “The mill shouldn’t have invested in its DRI plant in the first place, given gas scarcity in the country.”
Published in Dawn, September 14th , 2014