Steel set to become expensive as budgetary measures kick in

KARACHI: Construction cost is set to go higher as the steel industry announced its plan to increase prices by Rs2,500-3,000 per ton from July 1, 2017, citing measures the government has taken in Budget 2017-18.

“We have no choice but to increase steel prices. Steel companies will not be able to bear the burden for more than one or two weeks,” a top official of a steel company commented.

Finance Minister Ishaq Dar, in his budget speech, said that the government has decided to increase sales tax rates for the steel industry from the current Rs9 per unit to Rs10.5 per unit. The government collects General Sales Tax (GST) from the steel industry through electricity bills.

Dar said that the government took this decision after “consulting the industry and that the corresponding increase shall be made in ship-breaking and other allied industries”.

However, the industry official said there is more to the story.

“It was like forcing someone to accept something at gun point,” he said when asked about the government ‘consultations’ with the steel industry.

“It is true that the steel industry and the government had lengthy discussions on budgetary measures, but the government actually forced us to accept the increase of Rs1.5 per unit. Otherwise, they were raising it to Rs12 per unit,” he informed.

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