Iran, Afghanistan: PM urged to help stop steel smuggling into Pakistan

ISLAMABAD: The documented steel industry has approached Prime Minister Shehbaz Sharif to immediately intervene to control the menace of large-scale smuggling of steel from Iran and Afghanistan, which is destroying the local steel industry.

According to a communication of the Pakistan Association of Large Steel Producers (PALSP) to the PM on Monday, the industry has made an appeal to stop the devastation of the local steel industry due to the smuggling of steel from Iran/Afghanistan.

On behalf of the steel industry, it is stated that large-scale smuggling of steel from Iran and Afghanistan, coupled with some other factors is destroying the local steel industry. The industry is already fighting on many fronts for sheer survival and facing a very challenging situation due to massive currency depreciation, high financial cost as well as due to massive increase in the cost of different inputs.

The production activity is on halt due to the shortage of raw materials and many mills are working on a small fraction of their capacity.

This situation is worsened due blatant scourge of smuggling which continues unabated and unfortunately being done in the most organised manner. All this is resulting in devastation for the local steel industry and at the same time causing a huge revenue loss to the nation’s exchequer. Also, this damages the reputation of all those departments and government agencies who are deputed to oversee imports at the Customs Check Posts at the borders, the industry said.

According to an estimate, approximately 500,000 MT steel is being smuggled from these two countries annually to Pakistan which is approximately 10 per cent of the total steel being produced in the country. According to a conservative estimate, the menace results in a revenue loss of around 25 billion rupees to the national exchequer annually. This could lead to creating implications for the country in money laundering related (implicating FATF) issues as Pakistan and Iran do not have any formal banking channel for this purpose.

The menace of steel smuggling has literally wiped out the local steel industry in Quetta and most other parts of Balochistan. Over 80 per cent of steel that is sold in Balochistan is coming from Iran through smuggling as well as through mis-declaration, under-invoicing, and other deviant tactics.

The industry considers it as an organised crime which coupled with the state of the economy is pushing Pakistan towards de-industrialization. Due to loose controls, the smuggled steel is not confined to Balochistan now as it is reaching out to other parts of the country like Lahore, Karachi as well as other cities.

During March 2023, smuggled large trucks/trailers of steel from Iran were caught in Lahore and Customs department lodged cases/FIRs against them. Also, in the first week of April this month, a truck full of steel got overturned near the Chaman border (pictorial evidence attached). This was the case of smuggling where the truck was loaded with brand new steel (rebars) and was being smuggled from Afghanistan through Chaman border.

The Association, PALSP, has been making appeals to the concerned government departments to curb this unlawful activity by taking concrete measures however no steps have been taken to curb the menace of smuggling so far. In the past, we have also suggested to the government that the import of steel should be allowed only through sea routes.

This would help in effectively countering the threat posed by smuggling. This letter is a desperate effort on part of the industry with the hope that concrete action against the smuggling of steel will be taken on the highest priority, the industry added.

Copyright Business Recorder, 2023