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Friday April 12, 2024

Smuggling of steel from Iran feared during Eid holidays

Last year, huge quantities of steel from Iran was smuggled during Eid holidays

By Mehtab Haider
April 01, 2024
Labourers seen busy in construction work of wall of a water canal in Hyderabad city on March 18, 2024. — APP
Labourers seen busy in construction work of wall of a water canal in Hyderabad city on March 18, 2024. — APP

ISLAMABAD: The steel industry appeals the government to take pre-emptive measures to block smuggling of steel from Iran during Eid holidays.

Pakistan Association of Large Steel Producers (PALSP) in a statement on Sunday stated it is getting frantic messages from Balochistan based steel industry that “over 25000MT rebars & steel materials have been dumped across the Panjgoor (Kuwak) border to smuggle it during upcoming Eid holidays. Last year, huge quantities of steel from Iran was smuggled during Eid holidays with the connivance of officials and their close smuggling collaborators”.

The industry is terrified of this peril because official/Eid holidays are availed to smuggle huge consignments and to dump the same in big purpose-built stores in Balochistan. As a standard modus operandi, the perpetrators of this organized crime of smuggling suspend smuggling activity for days or sometime for weeks to defuse pressure, when authorities start (pseudo) ‘crackdowns’.

During this span of time, the previously amassed stocks dumped at big godowns are released. The quantum of smuggled steel products is so huge that the domestic steel industry is almost wiped out near border areas. The inflow of steel in such a large quantity is promoting and fueling the undocumented sector and systematically killing the tax paying legitimate industry of the country. If the government authorities get serious to stop smuggling they need to trace the goods once they leave Customs check posts and see where they end up.

According to government’s official figures, during February 2024, over 22,000MT steel material that was dumped from Iran via land route which includes steel slabs, steel bars, steel angles, sections, pipes and plates among other things. Export of scrap from Iran to other countries is completely banned, however unfortunately, Pakistan’s Customs authorities declare it as scrap.

It is noteworthy that in general market the price of re-rollable is $500-$520. Whereas, these materials are assessed at $380-$420 at border by Customs authorities (Taftan mainly). The incentive is so big that despite giving ‘share’ to all perpetrators the smuggled/mis-declared/under-invoiced steel is available across the country at significantly low prices.

Smuggling has become an existential threat to the domestic Steel industry. However, the authorities mostly give lip-service to curb the menace of steel smuggling. To great disappointment of the steel industry, as mostly reported in media, the efforts of the government are primarily focused on smuggling of sugar, fertilizer as well as wheat. However, steel remains ignored! Our Association is of the impression that despite the fact that steel is the back-bone of industry, but the government does not give due importance to stop smuggling of steel.

The issue of smuggling was taken up last year in Senate Standing Committee on Finance and Revenue and it was reported in leading English newspapers. During the meeting, it was disclosed that there are fixed ‘rates’ for trucks of smuggled goods ranging from Rs500,000 to Rs600,000, whereas between Rs100,000 and Rs300,000 was being ‘charged’ for clearance at each checkpoint – with impunity! Former prime minister Anwar-ul-Haq Kakar, who was Senator at that time, raised voice in that meeting and when he became PM he personally took notice of the situation and constituted an inter-agency committee to prepare a multi-pronged strategy to overcome smuggling.

Also, a massive crackdown/operation was launched to combat smuggling and steel smuggling was successfully stopped for few months during the care-taker regime. To our great disappointment, smuggling resumed with full might from start of 2024 again.

The official import data through Balochistan Customs Posts of February 2024 shows that large number of trollers were cleared at 60% to 70% of their actual weight. This means that while officially 22,000MT was imported during the period, the actual quantities must be much higher and could be to the tune of 30 to 35,000MT. Inflow of this illegally brought material is killing demand of steel in Punjab and eventually disturbing all the entire domestic steel market.

One of the factors responsible for continuation of smuggling is (deliberate) absence of weighting bridges/scanner/latest gadgets at many border check posts. All this provides a perfect ‘opportunity’ to perpetrators of smuggling to continue the crime with impunity. Despite some reports, there is no mechanism to share information of goods being exported or imported from and to Iran.

It seems exchange of information is not being encouraged/allowed by the entrenched mafias. To put a complete end to this organized crime of smuggling PALSP demands government to allow import of steel only through sea routes to halt smuggling of steel from Iran & through Afghanistan. This will help the government to utilize the same manpower to stop smuggling of wheat, sugar and fertilizers.