Ministry of Industries and Production, in its summary (now deferred) had stated that in order to discuss iron and steel production in the country through Director Reduced Iron (DRI) technology, a meeting was chaired by the Prime Minister Imran Khan on February 6, 2020. Prior to this meeting, Ministries of Industries and Production based on the advice of Attorney General for Pakistan moved two summaries of November 26, 2019 and January 18, 2020 for approval of the framework for promotion of DRI manufacturing in the country and both the summaries were returned by the ECC with certain observations. In the meeting, it was decided that DRI technology is required in the country in order to meet the need of high quality iron steel products of the local market. On the other hand, DRI policy is not feasible because of shortage of gas in the country. However, Tuwairqi Steel Mills (TSML), a DRI unit exists in the country and has been dysfunctional since, June 2013. The unit can be revived with the available gas resources. The sources said, related to this, there is pending litigation against Government of Pakistan in the Permanent Court of Arbitration (PCA) filed by TSML.

The Attorney General for Pakistan, in his letter of January 15, 2020 suggested a way forward for attracting potential investment in DRI sector through formulation of a general over-arching DRI policy in consultation with respective stakeholders.

According to the Ministry of Industries and Production, the CIENA Group, as a prospective investor, shall expand the existing facility of TSML plant with forward and backward integration with an additional Foreign Direct Investment (FDI) of $ 700 million in a phased manner spread over a period of 13 years, claiming that the Group has requested supply of gas to a fully integrated DRI unit after the first three years, once a portion of the overall investment has been made. The draft summary was circulated among the Petroleum Division, Law and Justice Division, Revenue Division, Board of Investment and Attorney General for Pakistan for comments.

FBR on February 14, 2020 did not support the CIENA Group's proposal for exemption from minimum tax under section 113 of the Income Tax ordinance 2001 for a period of ten years. The Board of Investment through an O.M. while responding to the draft summary stated that though section 15(1) of the SEZ Act, 2012 allows conversion of existing industrial estates into SEZ but that is to be subject to completion of codal formalities required under the law; however section 15(2), specifically bars the existing industrial units working in such industrial estates to avail the incentives under the SEZ.

Attorney General for Pakistan on February 11, 2020 was requested to provide comments on the draft summary mainly keeping in mind the litigation against GOP filed by TSML in PCA. It was requested to advise as to what impact the TSML specific DRI proposal ante will have on the ongoing arbitration in PCA.

The sources said, previously, the Attorney General office advised for a policy framework for DRI. It was also requested to confirm the quantum of actual damages that can be brought against Pakistan in case of AGP/ HUDU of February 14, 2020 and relevant excerpts are reduced as "irrespective of this office's views on the veracity of the DRI policy, merely giving the gas at the price which was offered by TSML earlier and not accepted by the GoP will adversely affect the arbitration proceedings directly.

Copyright Business Recorder, 2020