ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has approved gas supply to National Steel Complex Limited (NSCL), formerly Tuwairqi Steel Mills Limited (TSML), on an availability basis, while directing the Petroleum Division to ensure adherence to the economic merit order and undertake a review and update of the “Natural Gas Allocation and Management Policy 2005,” sources in the Petroleum Division told Business Recorder.
Sharing details, sources said the Petroleum Division briefed the ECC that NSCL, was established and commissioned in January 2013 with an annual production capacity of 1.28 million tons, and co-financed by Al-Tuwairqi Holdings of Saudi Arabia and POSCO of South Korea.
The plant is based on MIDREX direct reduced iron (DRI) technology owned by Kobe Steel of Japan, which is highly dependent on natural gas as feedstock.
READ MORE: National Steel Complex: revival near as govt okays 40 MMCFD of gas supply
The government had allocated gas to TSML in September 2005, followed by a Gas Sales Agreement (GSA) signed between Sui Southern Gas Company Limited (SSGCL) and TSML on August 15, 2006, for supply of 45 MMCFD gas—40 MMCFD for process and 5 MMCFD for captive power—at applicable industrial tariff. However, after commissioning in January 2013, the plant operated only briefly before shutting down in September 2013, as the company demanded gas at subsidised fertiliser feedstock tariff instead of the applicable industrial tariff.
At the time, the industrial tariff stood at Rs488/MMBTU, compared to Rs123/MMBTU for fertiliser feedstock. Provision of gas at the lower rate would have resulted in an estimated cross-subsidy/revenue loss of Rs5 billion to SSGCL. Although the GSA was extendable for another 10 years, no extension was agreed upon after its expiry in 2016, leading to lapse of the original gas allocation.
The Petroleum Division informed the ECC that multiple attempts were made over the years to revive the plant, but disagreement over tariff structure remained a key hurdle.
In 2018, Saudi sponsors initiated arbitration proceedings at the Permanent Court of Arbitration in The Hague, seeking USD 500 million in damages under the OIC investment agreement.
However, in December 2023, the tribunal dismissed all claims against Pakistan and directed the claimants to bear legal and administrative costs.
Meanwhile, in April 2022, the Ciena Group of the United States assumed management control of the plant as principal shareholder, and the entity was subsequently renamed NSCL.
The matter of revival remained under discussion at the Special Investment Facilitation Council (SIFC).
During its meetings, it was consistently emphasised that gas for industrial use could not be provided at subsidised rates, though supply at commercial tariffs could be considered.
Copyright Business Recorder, 2026
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