Increasing number of smuggling of steel products from neighbouring country is hampering the production of Pakistan Steel Mills (PSM) which is already running below 20 per cent of its capacity.
The smuggled goods which have flooded the local markets have posted a serious threat to PSM which is already facing huge losses amidst shortage of raw material. In a letter sent to Federal Board of Revenue (FBR) on February 24, PSM said the steel products were being smuggled through Pak-Iran border under the garb of scrap which was zero rated thus, providing cheaper goods by Rs8-10/kg as compared to the goods imported through legal means.
As the international price of the products has already declined owing to the worldwide economic recession, the smuggled goods would not only paralyse production of the country’s only mill, but also cause huge losses of revenue to the national exchequer in terms of taxes/duties. Referring to a letter sent by Pakistan Steel Line Pipe Industry Association (PSPA) on February 7 this year, PSM said the illegal act was badly affecting all regular/documented industries affiliated with PSPA. In order to safeguard the local steel industry in general and PSM in particular, FBR was requested to take immediate measures to control smuggling from outside the border. PSPA, earlier, had also written a letter to FBR to highlight the issue, but no action was taken by the concerned authority.
It is worth mentioning here that the shortage of raw material was reducing the production level of the mill; pushing the national institution towards more losses.
In view of financial constrains and reduced imports, the mill was currently utilising local iron ore and coke from available coke breeze to keep its entire production plants safe from any technical losses. But the mill was mostly depending on the local supply which also started decreasing due to the lack of rules and duty on exports. The locally produced raw material was also being exported due to difference of cost and payment issues, the sources claimed.
