ISLAMABAD: The steel industry on Thursday urged the government to take
immediate action to ensure availability of raw materials, reduce interest rates
and provide power at reasonable rates to save this vital industry from a
complete collapse.
Wajid Bukhari, general secretary of the Association of Large Steel
Producers of Pakistan (PALSP) said on Thursday that the recent decision by the
State Bank of Pakistan (SBP) to raise interest rates to record levels is
putting unbearable pressure on businesses. which are already operating at only
30 percent of capacity.
Compounding overhead costs have adversely affected many major
steelmakers, with one of Pakistan’s largest publicly traded rebar makers
reporting a loss in the latest quarter.
Steel Industry: SBP asked to help resolve LCs issue
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He said that the cost of borrowing is simply too high and as a result we
are seeing the closure of many factories. More than half of the industry has
already closed down and this will adversely affect Pakistan’s industrialization
for generations to come.
The increase announced in the Monetary Policy Committee (MPC) will
increase costs by at least 6000 rps/tonne, making it impossible for many
businesses to operate. The industry is also facing a surcharge of 3.23 rps/unit
of electricity, which has been imposed, making it the most expensive power in
the region for industries. This will increase costs by about 4000 rps/ton
further, adding to the already unbearable overhead costs