National Steel Complex: revival near as govt okays 40 MMCFD of gas supply

ISLAMABAD: The revival of National Steel Complex Ltd (NSCL), formerly Tuwairqi Steel Mills Ltd (TSML), appears imminent as the government has agreed to supply 40 MMCFD gas for processing and captive power generation at industrial tariff, subject to availability, after years of prolonged efforts and unsuccessful international litigation by the company, sources close to the Petroleum Minister told Business Recorder. TSML was established and commissioned in January 2013 with an annual production capacity of 1. 28 million tons. It was co-financed by Al-Tuwairqi Holdings (Saudi Arabia) and POSCO (South Korea). The plant is based on advanced Direct Reduced Iron (DRI) technology using the MIDREX process, owned by Kobe Steel of Japan. The MIDREX process is highly gas-intensive, with natural gas serving as the primary feedstock. READ MORE: Captive power gas: Govt extends monthly levy to third-party suppliers In September 2005, the government allocated gas to TSML, following which Sui Southern Gas Company Limited (SSGCL) executed a Gas Sales Agreement (GSA) on August 15, 2006, for the supply of 45 MMCFD gas (40 MMCFD for process and 5 MMCFD for captive power) at the applicable tariff. However, after commissioning in January 2013, the plant operated only for a few months and was shut down in September 2013 after seeking gas at fertilizer feedstock tariff instead of the applicable industrial tariff being charged by SSGCL. At that time, the industrial tariff was Rs 488/MMBtu, whereas the fertilizer feedstock tariff stood at Rs 123/MMBtu. Provision of gas at the lower tariff would have resulted in an estimated cross-subsidy/revenue loss of Rs 5 billion to SSGCL. The GSA was extendable for another 10 years, but upon expiry of its initial term in 2016, no extension was agreed, and the gas allocation made in 2005 also lapsed. Following the shutdown, successive governments held discussions on reviving the plant. However, TSML’s insistence on gas at subsidized fertilizer tariff remained a key hurdle. In 2018, the Saudi sponsors initiated arbitration at the Permanent Court of Arbitration (PCA) in The Hague, seeking damages of $500 million, alleging breach of obligations under the Organization of Islamic Cooperation (OIC) investment agreement. In December 2023, the tribunal ruled in favour of Pakistan, dismissing all claims and holding that the country had not breached its obligations. The tribunal also directed the claimants to bear administrative and legal costs. Meanwhile, in April 2022, Ciena Group of the United States assumed management control of TSML as the principal shareholder, and the company was subsequently renamed National Steel Complex Ltd (NSCL). The issue of reviving NSCL remained under active consideration at the level of the Special Investment Facilitation Council (SIFC). During the 7th Apex Committee meeting held on November 16, 2023, it was noted that gas for industrial purposes could not be provided at subsidized rates; however, the company could obtain gas at commercial rates. Subsequently, during the 9th Executive Committee (EC) meetings held on April 24 and May 25, 2024, the Petroleum Division was directed to explore options for allocation of up to 50 MMCFD gas for revival of steel production. At the 11th EC meeting held on December 11, 2024, directions were issued to ensure availability of 50 MMCFD gas and to create a separate consumer category to treat process gas requirements distinctly in tariff determination. The 12th and 13th EC meetings reiterated earlier directives to the concerned ministries, while the Ministry of Industries and the Petroleum Division (Mineral Wing) also shared input regarding availability of raw materials. During a meeting held on November 21, 2025 under the chairmanship of the Special Assistant to the Prime Minister for Industries and Production, the matter was reviewed in detail. SSGCL was directed to issue a credible and bankable commitment letter for supply of 45 MMCFD gas at standard industrial tariff for an initial period of 10 years, extendable by another 10 years. SSGCL issued the letter on November 27, 2025, confirming system capacity to supply the required gas at OGRA-notified tariff, subject to applicable approvals. Both parties also agreed to execute a legally binding GSA accordingly. Sources said that the Economic Coordination Committee (ECC) of the Cabinet, in its decision dated September 11, 2024, revised the natural gas allocation priority order, placing industrial process gas at the highest priority alongside domestic and commercial sectors. Under this revised framework, NSCL qualifies for gas supply as a major industrial undertaking. The Petroleum Division subsequently proposed that SSGCL may supply up to 40 MMCFD gas to NSCL for process requirements and captive power generation at applicable notified tariffs, along with relevant levies, subject to availability. It was further proposed that both parties finalize the terms and conditions of the GSA based on allocated volumes. The ECC, in a recent meeting, approved the summary submitted by the Petroleum Division, allowing gas supply to NSCL for revival of its operations at applicable tariffs, subject to availability. The Committee also directed the Petroleum Division to adopt a uniform policy regarding the appropriate forum for such approvals. The ECC decision will be placed before the Federal Cabinet for ratification in its upcoming meeting. Copyright Business Recorder, 2026

Read full story on Business Recorder