Profits of steel manufacturing firms: Ministry directed to present a detailed report

ISLAMABAD: A parliamentary panel, Tuesday, expressing serious concern over 100 percent increase in the prices of steel and iron products has directed the Ministry of Industries and Production to present a detailed report on the profits of the steel manufacturing firms.

The Senate Standing Committee on Industries and Production meeting which was held under the chairmanship of Senator Faisal Sabzwari also expressed anger over the absence of Federal Minister for Industries and Productions Khusro Bakhtiar.

Federal Secretary for Ministry Industries and Production Jawad Rafiq while briefing the members regarding the question raised by Senator Mushtaq Ahmed in the senate session about audited accounts of Pakistan Steel Mills Corporation (Pvt) Limited, said that total losses and liabilities of Pakistan Steel have increased by Rs67.167 billion from June 30 to December 2020.

Details of the financial implications of the standing committee’s recommendations on steel prices were also considered in detail.

Responding to the questions raised by the committee members, the secretary Ministry of Industries informed the committee that the services of a private firm would be sought for determining the exact production cost of steel and other commodities in Pakistan, so that the prices could be fixed accurately.

Senator Muhammad Abdul Qadir asked as to why the price of steel is rising in Pakistan, saying if the country starts importing the same steel products, what effect will it have on prices? Representatives of the Pakistan Association of Large Steel Producers informed the committee that about 400 companies are currently making steel in Pakistan. They further said that most of the steel in Pakistan is made from imported scrap and the price of scrap has increased in the global market, so does the cost of production, which in turn causes prices to rise in the local market.

Senator Saifullah Khan Niazi said that the industry must make all out efforts to provide cheap steel to the people. He added that various other industries are also connected with the steel industry and the increase in price affects everyone. The committee members sought all the details at the next meeting of the committee for accurate determination of steel production cost and prices.

Officials of the Engineering Development Board (EDB) said that work is underway in this regard and matters will be sorted out in collaboration with the representatives of the concerned industries.

The committee members also considered in detail the production of vehicles and the issues faced in this regard.

The committee was informed that 65 percent of the parts for vehicles manufactured in Pakistan are imported.

Senator Abdul Qadir inquired that despite the fact that the vehicles are expensive, the vehicles manufactured in Pakistan are not up to the standard.

Responding to the question, EDB CEO said that under the new auto policy, companies are required to make arrangements to manufacture vehicle parts locally over time, so that vehicles made in Pakistan can be exported abroad as well.

Officials informed that Pakistan Steel Mill started production in 1985. The mill made a profit of Rs9.54 billion. Pakistan Steel Mills has been running a deficit since 2008 due to global recession and other factors. The company incurred a record loss of Rs26.45 billion in 2008. From 2008 to 2014, Pakistan Steel Mills received about Rs59 billion as bailout but the company could not be revived.

Pakistan Steel Mills has incurred a total loss and liability of Rs67.1 billion from June 30, 2020 to December 31, 2020. Pakistan Steel officials said that so far about 5,000 employees have been laid off through golden handshakes. And after receiving the funds from the Ministry of Finance, the affairs of more employees will also be looked into. The chairman Committee adjourned further discussion on the matter till the next meeting due to the absence of Senator Mushtaq Ahmed.

The meeting discussed in detail the status of declaring mining as a formal industry by the Government of Pakistan. The mining sector is a provincial matter after the 18th Amendment, ministry officials said. As far as the federation is concerned, it is looked after by the Ministry of Petroleum. We have written a letter to the Ministry of Petroleum. As soon as the ministry approves it, a notification will be issued to declare mining as an industry.

The chairman of the committee asked what are the benefits of declaring mining as a separate industry. Officials informed that the industry status makes it easier to get loans from banks and other tax matters. Which will make further progress in this field possible.

While taking up the public petition filed for setting up of Pakistan Industrial Development Corporation (PIDC) regional Office in Quetta, Balochistan, the secretary, Ministry of Industries and Production said that there was no need to set up a regional office of PIDC in Quetta.

The secretary of the ministry further said that there was no plan of PIDC nor any projects in Balochistan and therefore, there was no need to set up an office in Quetta.

The committee meeting was attended by senators, Falak Naz, Saifullah Sarwar Khan Nyazee, Mohammad Abdul Qadir, Faisal Saleem Rehman, Hidayatullah, Ataur Rehman, Shaheen Khalid Butt, and officials of the concerned ministry.

Copyright Business Recorder, 2022