Pakistan Association of Large Steel Producers (PALSP) has urged Pakistan’s Prime Minister Imran Khan to intervene in order to revive the country’s steel industry. PALSP seeks the introduction of a 10 to 15-year long-term tariff structure to support domestic steel producers.
Many Pakistani steelmakers are stressed and have been declaring heavy losses despite government incentives for infrastructural growth. Finished steel prices, on the other hand, have failed to show any improvement amid subdued end-user demand. The association has sought government aid to provide a predictable roadmap for the steel industry.
PALSP suggested the government to introduce a 10 to 15-year long-term tariff structure and regionally competitive energy tariffs along with the removal of unproductive taxes.
The Pakistani government had announced a comprehensive package for the revival of the construction industry under the housing scheme ‘Naya Pakistan’. Also, mega infrastructural projects under CPEC and other schemes must consume locally finished steel rather than imports which avail tax concessions to help the steel sector.
The steel industry has failed to increase its revenue due to the present tariff structure. Mills are not able to make enough profit margins also an additional tax of 1.5pc would deepen their losses further.
On the other hand, the consumption of substandard steel has resulted in the collapse of buildings and bridges and damages to mega infrastructure. Strong structural reforms are needed to make the steel sector globally competitive and production of such substandard steel needs to be stopped immediately.
Steelmakers have also requested for a curb on import or smuggling of low-priced finished and semi-finished steel, especially from FATA/PATA countries. These regions have massively misused tax exemptions given by the government and caused a loss of revenue of upto Rs15bn ($91mn) per annum to the government. Trading steel products without payment of excise duty on finished products need to be stopped immediately, said PALSP.