The initial proposal for the project was received in October 2003 and the memorandum of understanding (MoU) was signed between the GoP and Al-Tuwairqi Group (ATG) on May 28, last year.
According to the MoU, the entire area, ie, 219 acres of land to be occupied by ATG be declared export zone under Export Processing Zone Authority (EPZA) Ordinance, 1980.
The MoU also said that the area, as EPZ, would throughout the life of the project, enjoy each of the facilities/incentives set out in schedule of the agreement. It was also agreed that the notification or directives issued in pursuance of the EPZ Ordinance 1980 will not be withdrawn or adversely modified.
Al-Tuwairqi Group of Companies had already acquired 220.21 acres of land on 60 years lease from Pakistan Steel against the payment of Rs 261 million for the establishment of Tuwairwi Steel Mills at Bin Qasim. The acquired land was being developed for the start of construction work of the project buildings, which is expected to be inaugurated in November.
The Industries Ministry was of the view that it was necessary that the area acquired for the establishment of steel mill by the Saudi group be declared as EPZ under Clause (K) of Section-2 of the EPZA Ordinance 1980 as per the commitment in the MoU.
The sources said the government, in the MoU, assured that it would not withdraw or adversely modify any notification or direction issued in pursuance of the EPZA Ordinance, however, CBR issued amendment on June 2004 according to which "the units established in EPZs shall export only up to 20 percent of their total production to tariff areas in Pakistan, while 80 percent shall be exported to other countries."
The Industries Ministry argued that Tuwairqi Steel Mills Limited (TSML) is to be declared as EPZ as it is primarily based on exports. The project, as per the EPZ rules in vogue at the time of signing of the MoU, was extended unrestricted option to export to Pakistan upon paying relevant tariffs.
Subsequently, the CBR amended the rules restricting export to Pakistan to 20 percent only which was strongly contested by Al-Tuwairqi, challenging that it was subsequent to the signing of the MoU as such new law was applicable to them. The group also approached the concerned ministry for exemption from the condition of 80/20.
The ministry has approached the Economic Co-ordination Committee (ECC) of the Cabinet to declare ATG Complex as EPZ, besides exemption of the area of steel mill area from the effects of CBR SRO, the sources added.