Unmet promise: Tuwairqi Steel still hopeful about cheaper gas supply

Country head says ECC will take up matter again in next meeting

ISLAMABAD: The management of Tuwairqi Steel Mills still seems hopeful that the government will settle the gas supply issue and provide the energy at a concessionary rate – remarks that come in the wake of Economic Coordination Committee’s (ECC) refusal to approve subsidised supplies to the industrial complex.

“We have been told that the ECC will take up the issue again in its next meeting,” said Zaigham Adil Rizvi, Country Head of Tuwairqi Steel, while talking to The Express Tribune.



He said they had even agreed to offer 5% equity in the mill to Sui Southern Gas Company (SSGC) against gas supply at a discount.

The ECC, which met here on Friday, dismissed the Ministry of Industries’ proposal, calling for the supply of feedstock natural gas to the direct reduced iron (DRI) plant of Tuwairqi Steel at a concessionary rate of Rs5 billion per annum over the next five years.

Tuwairqi Steel Mills, a joint venture between Saudi Arabian and South Korean companies, has planned to set up Pakistan’s largest steel complex with production capacity of 1.28 million tons per annum.

However, the mill has suffered losses of millions of dollars because of the closure of DRI plant for the past several months.

Rizvi pointed out that though the plant stood closed because of the gas allocation issue, the mill did not sack any employees. “Employees numbering 1,100 means 1,100 families,” he said, stressing that the release of gas would also attract $1 billion in investment.

The plant had been set up after a commitment given by the government of Pakistan about gas availability and the government would also earn revenue from the venture, he said.

Phase-I of the DRI plant has been completed with an investment of $340 million while investment in phase-II and III is expected to be made in the range of $850 to $900 million. This, however, has been linked with commercial success of the DRI plant.

In a memorandum of understanding, the government gave an undertaking that 40 million cubic feet of gas per day (mmcfd) will be provided to the mill as feedstock and 30 mmcfd as fuel. Tariffs for the gas would be the same as applied to other industrial consumers.

Published in The Express Tribune, September 27^th, 2014.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.