The sources said a high-level inter-ministerial meeting was held on September 9, 2013 in the Ministry of Industries and Production to discuss TSML's issues with regard to concessional tariff on the feedstock portion of natural gas and imposition of a 10 percent duty on the import of DRI from overseas. The meeting was attended by the Secretary Petroleum, Abid Saeed, Additional Secretary Petroleum, Muhammad Naeem, Allah Bux Member National Tariff Commission (NTC) , Hasan Mehmood, Director (Gas) and Zafar Haidar, Joint Secretary(I&F), Ministry of Industries and Production. A delegation of TSML headed by Zaigham Adil Rizvi, Country Head/Director Projects of TSML also attended the meeting. The sources said Rizvi explained the issue of necessity of a concessional tariff on the feedstock of natural gas and requested that TSML may be provided a special tariff to feedstock in portion of natural gas being used as raw material of the process, in line with the initial commitment of the Government of Pakistan made through an MoU which stated that tariff can be comparable in the range given to M/s Fatima Fertiliser which also uses natural gas as feedstock.
After hearing the management of TSML, Secretary Petroleum and Natural Resources acknowledged that natural gas is major component of their operations and 90 percent is being utilised for feedstock and only 10 percent is being used as fuel gas. But he added that presently the price of gas is Rs 438 MMU and that in the given scenario there is acute shortage of gas and if gas is supplied to TSML for less than Rs 438 the cost of gas would be sort of a subsidy by the government.
Keeping in view the volume of gas required by TSML, it would roughly be around Rs 2 billion subsidy annually and it would be very difficult for the Ministry of Petroleum and Natural Resources to approach any competent forum for grant of concessional tariff of natural gas to TSML. He further argued that other industrial groups may also come forward and make such requests formally whereas the ground reality is that all subsidies are being withdrawn gradually.
After a detailed discussion, it was decided that TSML will come up with different options with a view to overcoming the dilemma being faced by the company with regard to price of natural gas being used by the steel mill for the feedstock purpose. The management of TSML will send their fresh proposal/option to the Ministry of Industries and Production for further necessary action in the matter.
With regard to imposition of a 10 percent duty on the import of DRI from other countries to Pakistan, the management of TSML put forward their point of view that presently they are sole producer/manufacturer of DRI in Pakistan and that DRI of Iran is being brought to Pakistan via the UAE and requested that National Tariff Commission (NTC) should impose a 10 percent duty on the import of DRI. Dr Allah Bux Malik, Member NTC, stated that the Commission is a recommendatory body. He offered NTC's platform to resolve the issue with regard to the import of DRI. Presently, NTC has recommended 5 percent duty on the import of DRI.