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November 21, 2017

Amreli Steels plans electrical transmission JV

Business

November 21, 2017

KARACHI: Amreli Steels, Pakistan’s leading manufacturer of reinforcement bars, planned a joint venture with a Chinese company to produce and sell electrical transmission equipment in the country seeing a raft of new power projects on their way to meet growing energy demand.


“The board of directors of Amreli Steels Limited in the meeting on 17 November considered and approved participating in an investment opportunity in electrical transmission business through a joint venture with a Chinese company Qingdao Huijintong Power Equipment Company Limited (HJT),” the steelmaker said in a stock filing on Monday.


“Both the parties have agreed to consider establishing a joint venture company in Pakistan which will be engaged in production and sale of electrical transmission towers and metal structural products.”


Amreli Steels will take 65 percent equity stake in the joint venture, translating into an investment amount of approximately Rs1.040 billion. But, the investment is subject to prerequisite corporate and regulatory approvals.


Hadi Akberali, a director at Amreli Steels told The News that the proposed joint venture is primarily aimed at transfer of technology into Pakistan. The Chinese company is listed at the Shanghai Stock Exchange and principally engaged in the research, design, manufacture and distribution of transmission line towers within and outside China. Analyst Hamdan Altaf at Taurus Securities Ltd. estimated the total value of the proposed joint venture company Huijintong-Amreli (Private) Limited at Rs1.6 billion.


Akberali said power generation capacity is expanding and a significant expansion in transmission would be needed to evacuate electricity. “Presently, most of transmission equipment is imported,” he added. “We have planned to tap into the growing demand. Local production will also save precious foreign exchange.”


Currently, a total of 22 projects worth $27 billion are at different stages of construction under China-Pakistan Economic Corridor (CPEC). Of them, 15 projects with an estimated cost of $22 billion are related to energy sector.


The government is expecting around 11,110 megawatts to come online by next year, which will give a sought-after solace to the country where electricity demand and supply gap has sometime widened to 5,000 megawatts. CPEC projects are an integral component of China’s One Belt One Road strategy envisaging three trillion dollars of spending in massive infrastructure developments in 68 countries to improve its global connection. Amreli’s executive further said the new production could also meet the demand for metal structures in telecom and other sectors.


Currently, the steelmaker has an annual steel rebar manufacturing capacity of 180,000 metric tons. It produces high quality billets in melt shop. The company planned to more than double its steel-melting capacity given a loud steel demand in the country. The World Steel Association projected steel demand in Pakistan at more than 12 million tons by 2019 from 7.1 million tons in 2015.