“The biggest cause of the under-development of Pakistan’s steel sector is that the full potential of our country’s natural resources has never been fully realised until now,” observed Mian Rehman Aziz Chan, the executive committee member of the LCCI and the managing director of the Siddique Iron Industries Private Limited.
Rehman Aziz, who is the former director of the PBIT, told The Nation that steel industry is the most inefficient sector in the country due to incompetence and apathy of the federal as well as the provincial governments, as the concerned departments including Provincial Mine & Mineral Department and Engineering Development Board have played no role to enhance the efficiency of the steel industry. For instance the EDB has never written a single paper on steel sector in the country, which is important and foremost responsibility of the board, he pointed out.
He observed that it is criminal negligence on part of the govt that despite huge reserves of iron ore in the country the steel industry has to procure whole raw material from abroad. He said that iron ore declared reserves just in Punjab are 1.2 billion matric tons in the areas of DG Khan, Rajoa, Chiniot and Kalabagh etc. He said that Provincial Mine & Mineral Department’s prime and real responsibility is to execute exploration of mines in the province, but its performance is nil, as the country has to import the whole quantity of iron ore for domestic production. And due to this reason the steel sector is not making progress, he added.
“Steel sector is completely dependent on imported raw material in form of iron ore and melt-able recyclable steel scrap, which results in loss of heavy foreign exchange”.
The steel sector in Pakistan is concentrated mainly in five areas i.e. Karachi, Lahore, Gujranwala, Sheikhupura and Islamabad. Since the raw material procurement is totally imported, therefore, other than Karachi, in all other areas the cost of carriage and transportation further adds to the cost of production.
In Pakistan, Punjab is blessed with more iron reserves than the world’s annual steel production. The industry of the country, having reserves of such magnitude, is still procuring imported raw material.
Responding to a question, he said that the steel melters are contributing the most in Wapda’s revenue collection, as they pay electricity bills of up to Rs25 billion annually. The members of the Steel Melters Association has submitted Rs30 billion tax last year while Rs18-20 billion have been submitted under the head of only sales tax, he pointed out. He stated that the steel sector has invested around $250m in just last five years.
He asked the govt to ensure the development of the industry by exploiting the indigenous iron ore reserves and to ensure a steady supply of raw material for the steel sector. This will also help save precious foreign exchange reserves to the tune of $ 320 million, which presently is being spent on imported raw material. In addition, this will provide our local steel sector a level-playing field with their international competitors along with an opportunity to acquaint themselves with the latest technology to enable them to produce international certifiable products. In addition to low procurement costs, using the latest and efficient technology will render us to attain economies of scale and make us competitive in the international market.