If problems are not resolved immediately, we will start dismantling plant from RSEZ, says group CEO
\n Islamabad
\nA Chinese steel giant, Century Steel Group has threatened to withdraw its investment and shut down operation in Pakistan, if its demands were not met.
\nThe steel group relayed this in a letter to Prime Minister Shehbaz Sharif.
\nIn the letter, Century Steel Group CEO Li Chunjian stated the company had reached the decision to wrap up its business and withdraw investment from the country as the government departments, responsible for handling foreign direct investment (FDI) in the China Pakistan Economic Corridor (CPEC) Rashakai Special Economic Zone (RSEZ) in Khyber Pakhtunkhwa, failed to resolve multitude of their problems.
\n\u201cThis will be our last notice to the Government of Pakistan; if the problems are not resolved immediately, we will start dismantling the plant from the RSEZ,\u201d the company said.
\nA senior government official, when approached by The News on Friday night, stated that the prime minister has constituted a committee under Federal Minister for Communications, Privatisation and Board of Investment Abdul Aleem Khan to address all of the company\u2019s complaints.
\nThe committee consists of members from the KP and federal governments.
\nAccording to the steel group, they arrived in Pakistan with big goals and intended to build up the country\u2019s biggest steel mill in three stages in the first RSEZ of CPEC in KP.
\nOver $30 million out of the $82 million invested in the project\u2019s first phase was already underway, with an anticipated yearly production of 500,000 tonness of steel products.
\nThrough the transfer of cutting-edge steel technology from China to Pakistan, the following two stages would also result in an investment of more than $200 million in Pakistan for the manufacturing of downstream steel products.
\nWithin five years, the final capacity for steel products would be 1.5 million tonnes, the China\u2019s steel giant said.
\n\u201cWe aimed to contribute to the GDP of Pakistan and also to create thousands of jobs as well as build exports of steel products to the regional markets. However, due to the following unresolved issues for over five years, we have finally decided to exit from Pakistan and report this matter to the Chinese government\/embassy and the international press as a last resort.
\n\u201cWe have been waiting for the last five years at RSEZ and maintenance of our staff and expenses has caused us big losses to the tune of $7.5 million,\u201d it said in the letter.
\nPlot purchase agreement couldn\u2019t be signed with KPEZMC despite our various exchanges and meetings and long time has passed.
\nExtremely high land prices at RSEZ are impacting our capital investment costs. Power supply, which is the most critical matter for any steel mill operation, couldn\u2019t be arranged by the RSEZDOC due to their pending issues with Nepra for distribution license, the letter maintained.
\nThe Century Steel Group said they required 100MW stable and cost-effective power which remained elusive despite long time has passed.
\n\u201cWe are now forced to look for arranging our own power from other means like investment into solar power plant nearby RSEZ increasing the overall capital investment away from our core steel business.
\n\u201cThe SEZ policy is extremely weak with no incentives for FDI despite several government and team changes in the bureaucracy. Continuous rise in the price of power has made the business un-viable and we foresee further increase in power prices.
\n\u201cTaxes applied on steel industry are adding insult to injury, as two large scale steel mills in Pakistan have already shut down (Amreli Steels\/ Agha Steels) after failing to sustain the steel industry taxation,\u201d it said.
\nThe letter said despite incentives and waiver on import duties\/taxes given to the small steel mills at FATA\/PATA, their sub\u00adstandard steel production is spoiling the market in Pakistan, leaving large scale mills out of business.
\n\u201cThere is no strict implementation of quality steel production in Pakistan and the responsible departments are not bothered about the sub-standard steel being sold across Pakistan.
\n\u201cThe management and security of CPEC RSEZ instead of helping has created a burden for us forcing us to bear the security personnel expenses and uncalled-for demands. Free movement of our personnel for day to day needs is not possible and even our sick employees cannot go and seek medical attention outside the RSEZ.
\n\u201cSome of our in-house employees were put on the black list by the agencies for reasons unknown to us despite our requests for resolving this matter. Overall, the demand for steel has contracted in Pakistan due to several factors including high inflation, currency instability and economic downturn,\u201d it added.
\nThe government has no focus on the special economic zones success and nothing is being done to protect the already arrived foreign direct investors from China, the corporation complained.
\nThe recent orders for security protocols have significantly increased the business costs and impacted the business, it maintained.
\n\u201cLastly, the local banks do not cooperate even on approved SBP Policy of FOC for plant and machinery imports and ask us to deposit large sums of money in their accounts.
\n\u201cWe are forced to bring all the above to your notice so that you are in knowledge of what really is happening to the Chinese foreign direct investment coming to Pakistan and take immediate corrective measures. We would request to meet you in person at your earliest convenience to discuss the above in detail,\u201d it concluded.<\/p>\n","protected":false},"excerpt":{"rendered":"
If problems are not resolved immediately, we will start dismantling plant from RSEZ, says group CEO Islamabad A Chinese steel giant, Century Steel Group has threatened to withdraw its investment and shut down operation in Pakistan, if its demands were not met. The steel group relayed this in a letter to Prime Minister Shehbaz Sharif. […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":{"0":"post-445306","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-top-news"},"yoast_head":"\n