FIA unveils duty free steel raw materials imports scam in Pakistan

Sunday, 13 Feb 2011

The Express Tribune reported that investigators probing corruption in Pakistan Steel Mills have unearthed a scam involving more than a dozen companies that caused a revenue loss of PKR 50 billion to the national kitty and PKR 100 billion to the cash strapped mill

As per report, Federal Investigation Agency officials disclosed that “In 2006, the Shaukat Aziz government issued SRO 565, allowing two private companies to import raw materials for manufacturing steel products at 0% customs duty. However in 2007, the scope of the concession was extended and a dozen more companies were permitted to import duty free raw materials.”

According to the SRO, the raw material importing companies must install their own manufacturing units, they should change the form of raw material by making value addition so that it does not look similar to the raw material of PSM and they could not sell the raw material in local markets or manufacturers.

However, sources said these companies did not meet the conditions as they neither installed any manufacturing unit nor made value addition. Contrary to the obligation, they also sold the raw material in local markets.

From 2007 to 2010, these companies imported an estimated 5 million tons of raw material, as trillions of rupees worth of foreign exchange flew out of the country and billions of rupees in revenues were lost in customs duty exemption.

The FIA also found that the companies made fake transportation documents by falsely declaring they had installed manufacturing units in different parts of the country. Instead, they sold the raw material to local companies. As a result, sales of PSM decreased considerably, causing a loss of around PKR 100 billion from 2007 to 2010.

Many transportation companies were also part of the scam as they helped the steel dealers in preparing fake documents of raw material supply, sources said.

FIA Director Sindh Moazzam Jah Ansari, while talking to The Express Tribune, pointed out the scam was one of the main reasons that brought PSM down.

He said “It is one of the biggest scams in the country and all cases are being investigated. We issued notices to customs authorities, seeking details of import of steel raw material under zero customs duty but have not received any response despite a passage of two months.”

He said FIA has not been able to take action against customs officials, who say it is very difficult to retrieve data of three years.

Mr Ansari said letters were also sent to the companies involved in the scam, who were asked to provide details of last three years utility bills, income tax receipts, sale and purchase and installation of manufacturing units, but no response was received in that case either.

A PSM spokesman told The Express Tribune that the SRO caused losses to the steel mill, adding that the mill had demanded government’s standing committee to withdraw the order. The committee will raise the issue in the National Assembly.

PSM Marketing Consultant Mr Sajjad Hussain said the mill has already filed an application in the Federal Board of Revenue, seeking cancellation of the SRO and PSM has suffered losses of over PKR 100 billion due to the order.

(sourced:TheExpressTribune)

PSM goes for another hike for steel products

Sunday, 06 Feb 2011
Daily Times reported that Pakistan Steel Mill has raised prices of steel products once again by PKR 1,000 per tonne to PKR 1,500 per tonne.
Billets 150x150 - By PKR 1000 per tonne to reach PKR 54,000 per tonne
Slabs - By PKR 1,000 per tonne to reach PKR 51,500 per tonne
Plate - By PKR 1,000 per tonne to reach PKR 54,000 per tonne
Galvanized - By PKR 500 per tonne to reach PKR 83,300 per tonne
CR - By PKR 500 per tonne to reach PKR 78,300 per tonne
HR - By PKR 1000 per tonne to PKR 2500 per tonne(sourced:Daily Times)

PSM raises steel prices

Tuesday, 25 Jan 2011
Business Recorder reported that the Pakistan Steel Mills Corporation has announced to raise prices of the six products by amounts up to PKR 4,150 per tonne, to rationalize its prices in line with international market prices.
As per report, PSM has raised prices of billets, hot rolled coils, cold rolled coils, thick plates, MS slab and pig iron by PKR 500 per tonne to PKR 4,150 per tonne with immediate effect.
Some of the details mentioned in the report are
Excluding taxes
1. Billet - Up by PKR 1,000 per tonne to PKR 4,150 per tonne90X90/ 80X80/ 75X75 mm - Up by PKR 4,150 per tonne to PKR 57,000 per tonne100X100/105X105 mm - Up by PKR 3,500 per tonne to PKR 56,000 per tonne125X125 mm - Up by PKR 2,500 per tonne to PKR 54,500 per tonne150X150 mm - Up by PKR 1,000 per tonne to PKR 53,000 per tonne
2. HRC - Up by PKR 500 per tonne to PKR 1,400 per tonne2-2.35X100/1220 - Up by PKR 1,400 per tonne to PKR 62,600 per tonne2.35- 3.25mm - Up by PKR 1200 per tonne to PKR 62,200 per tonne3.25-3.65mm - Up by PKR 1,000 per tonne to PKR 61,800 per tonne3.6504mm - Up by PKR 900 per tonne to PKR 61,500 per tonne4-5mm - Up by PKR 600 per tonne to PKR 61,000 per tonne5-6mm - Up by PKR 500 per tonne to PKR 60,700 per tonne
3. CR - Up by PKR 500 per tonne to PKR 800 per tonne
4. Plates - Up by PKR 1000 per tonne to PKR 53,000 per tonne
5. Slab - PKR 50,500 per tonne
6. Pig iron - PKR 42,200 per tonne
(Sourced from Business Recorder)

Update on performance review of Pakistan Steel Mill

Sunday, 23 Jan 2011

The Daily Times reported that Mir Hazar Khan Bijrani Pakistan’s Federal Minister for Industries and Production said that increase in production capacity of Pakistan Steel Mill is crucial to make the entity financially resilient.
Mr Bijarani while attending a meeting held at Pakistan Steel, where update on previous and current performance of PSM was given by Mr Imtiaz Ahmed Lodhi acting CEO of PSM said that “PSM is striving to acquire its profitable position by the end of this year, good sales of its products, export of coke breeze and other profitable MoUs will help make the defence and economy strong,”
Mr Bijrani also said there is no possibility of downsizing in PSM
The committee members commended the current working of PSM and the new business plan, which resulted a positive change in sales especially the sale of PKR 3 billion achieved in previous month as compared to last 17 months. The committee showed satisfaction on the progress of current management and said that if the said business model is implemented then it is hoped that PS would again become a viable and productive entity. The committee also emphasized to use local iron ore and other raw materials to save the cost of products and saving of the foreign exchange.
The committee was briefed that, “PSM has given about PKR 100 billion in the form of taxes and duties to the government of Pakistan, and PKR 1 billion as dividend, moreover PSM doesn’t need any bailout package from the government now and soon the entity will come out from losses.”

Replying a query, acting CEO said that, “PSM is also making efforts to control the production cost of products and as per new business plan the strategy for usage of maximum local iron ore from Balochistan is implemented and about 30,000 tonnes of lump iron ore from Balochistan was purchased during this month, which is the highest quantity ever since.”
The committee members came to the point that it is a national asset with directly thousands of employees and indirectly millions of peoples of engineering industries of the country are intact with it, therefore it must be kept working in the interest of the country.
(Sourced from dailytimes.com)

Pakistan plans outsourcing PSM management - Mr Bijarani

Friday, 21 Jan 2011

The Nation reported that Pakistan government is planning to outsource the management of Pakistan Steel Mills with an aim to improving the mills' overall performance.

Mr Mir Hazar Kahn Bijarani federal minister for industries and production said that "The expected measure would not only boost the assets’ quality of the PSM, but also to enhance its productive capacity."

Mr Bijarani said that a total of 10 foreign companies have shown interest to provide the required outsourcing service for the cash strapped PSM.

He added that "We will from a technical committee to evaluate the offer likely to be made by the interested companies."

(Sourced from www.thenation.com)