M/s Tuwairqi Steel Mills Limited (TSML) has reportedly sought additional concessions from the government to revive the project over and above the concessions sought in 2014, reliable sources told Business Recorder.
Prime Minister's Advisor on Commerce, Textile, Industries and Production and Investment, Abdul Razak Dawood and M/s M/s Tuwairqi Steel Mills Limited (TSML) discussed the revival plan and the possibility of further investment of $ 700 million. The Economic Coordination Committee (ECC) of the Cabinet has also constituted a committee under the chairmanship of Minister for Planning, Development and Reform, Asad Umar to go through the proposal of CIENA Group, owned by a Pakistani American.
The committee proposed by the Ministry of Industries and Production will comprise Abdul Razak Dawood, Special Assistant to the Prime Minister on Petroleum, Secretary Petroleum, Secretary MoI&P and Chairman FBR.
The new concessions sought by the CEINA Group are as follows: (i) exemption from the minimum under section 113 read with other applicable sections of the Income Tax Ordinance 2001 pertaining to the collection, withholding and deduction of income tax at source, for a period of 10 years from Commercial Operation Date (COD) of the Direct Reduced Iron( DRI); (ii) exemption from additional customs duty of 2 per cent or any amended rate on the import of iron oxide pellets (IOPs)- HS code 2601.1200 till the time backward integration is complete to fully fulfill the raw material requirements of the DRI plant; and (iii) TSML shall be given a status of Special Economic Zone (SEZ) instead of the existing status of an Export Processing Zone (EPZ) as the project has primarily become a project of import substitution over the passage of time and this would be applicable to the future gas based DRI route steel plants as well. Presumptive tax on exports is 1 per cent in Export Processing Zone (EPZ) whereas charges in EPZ are 0.5 per cent.
As a special case, a waiver would be extended to TSML from the regulatory duty and additional custom duty on the import of DRI based billets, to be used for high quality steep products for the market development. The sources said Industries Ministry in order to promote DRI technology in the country with the help of FDI, intends to create an enabling environment for providing systematic incentives to all the investors either in Greenfield (the new investors) or Brownfield category by extending the following: (i) system gas, if available, would be provided at the cost of $ 4.65 per MMTBU to a DRI unit on the basis of first come first serve to be used as feedstock for a maximum period of up to 10 years. The investors under Greenfield category shall be entitled to receive the system gas supply on commissioning of the unit and the investor under Brownfield category shall be entitled to receive system gas supply after three years of signing the agreement. This shall be reviewed after five years in order to ascertain the availability of system gas; (ii) in case of non availability of system gas, the government would help provide gas through other available resources including imported RLNG on terms and conditions with prospective investors to be decided on case to case basis depending on the international price of RLNG; (iii) minimum turn over tax slab for the prospective investor on case to case basis with the approval of Federal Board of Revenue (FBR); (iv) exemption from additional customs duty of two per cent on iron oxide pellets or any other intermediary product specific to DRI plant and not produced/ processed in Pakistan shall be considered on case to case basis by FBR without creating market distortions; and (v) export of DRI product under this framework, government shall encourage the DRI units to be set up in EPZs or SEZs subject to land availability on standard terms and conditions.
The sources said investors shall commit investment in the shape of FDI, quantum of which will be decided on case to case basis depending on the capacity of the unit. However, minimum threshold of FDI will be $ 500 million. A year-wise FDI plan will be presented to MoI&P through Board of Investment (BoI). Transfer of FDI through National Bank of Pakistan (NBP) would be confirmed by the State Bank of Pakistan (SBP) on yearly basis. Each case shall be presented before the Cabinet for approval.
M/s TSML is a Brownfield DRI entity. The same privileges and obligations will be applicable on the Brownfield units that can be revived through additional FDI by the exiting status under the framework to be contingent upon the advice and clearance from the Attorney General of Pakistan so as to ensure that the prospects of Pakistan's stance in the ongoing arbitration are not affected in anyway. According to the MoI&P, the promotion of DRI technology through framework will help bridge supply and demand gap in the country. M/s TSML, if it avails of the benefit provided under this framework may contribute by producing 1.28 million tons steel, in addition to 1.1 million tons from revived PSM.
Copyright Business Recorder, 2019
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