Pakistan Approves Legal Fees for Al-Tuwairqi Steel Case

Release time：Nov 01, 2019 From：admin

The Tribune reported that Paksitan government has diverted PKR 419 million, earlier earmarked for subsidies, grants and loan write-offs, for paying fee of the foreign counsel defending Pakistan’s case in the international court, approached by Saudi Arabia’s Al-Tuwairqi Group of Companies. Earlier, the government had approved a supplementary grant of Rs110 million to pay fee of the foreign counsel for pursuing the case. Now, it has endorsed a technical supplementary grant of Rs419 million, which has been diverted from the funds allocated to the Ministry of Industries and Production for grants, subsidies and loan write-offs.

Al-Tuwairqi Steel Mills Limited, a foreign direct investment project of the Al-Tuwairqi Group of Companies and a joint venture with a South Korean firm, was established at Bin Qasim, Karachi over an area of 220 acres. The Saudi firm stopped work on the plant after the previous Pakistan Muslim League-Nawaz (PML-N) government refused to provide gas at a discounted rate. TSML management had sought gas supply at Rs123 per million British thermal units (mmbtu) in a bid to efficiently run the plant. However, the government turned down the request, arguing that it would amount to a subsidy of Rs25 billion over five years. The Finance Division and the Ministry of Petroleum and Natural Resources also opposed the plan, saying that the government was not legally bound to provide gas at a concessionary rate. Consequently, the Al-Tuwairqi Group of Companies pulled out its investment and filed a case against the government of Pakistan in the International Court of Arbitration. It invoked Article 17(2) of the 1981 OIC agreement for the promotion, protection and guarantee of investments among member states of the Organisation of Islamic Cooperation to address its grievances.

There were plans to turn TSML into Pakistan’s largest steel complex with production capacity of 1.28 million tons per annum. However, its Direct Reduced Iron plant was shut down for several months in 2014 due to the dispute over gas supply. Phase-I of the DRI plant had been completed at a cost of USD 340 million while capital injection in phase-II and III was expected to be in the range of USD 850-900 million.