Staff Reporter :
Industry owners have presented a six-point demand to address the challenges confronting the sector amidst the rise in dollar value and escalating gas and power prices.
The Bangladesh Steel Manufacturers Association highlighted the severe crisis gripping the nation’s steel industry due to these factors.
During a press conference held yesterday, industry insiders articulated a comprehensive six-point demand aimed at safeguarding the domestic steel industry.
In a written statement, Mohammad Jahangir Alam, president of the association, emphasised that the surge in the dollar’s value is impeding access to Letters of Credit (LC) for importing crucial raw materials.
This obstruction is resulting in shortages and disruptions within the supply chain, exacerbating the industry’s predicament.
Mohammad Jahangir Alam highlighted the significant escalation in costs for raw materials, chemicals, and components, with the steel sector being heavily import-dependent, accounting for 85% of its needs.
Moreover, he pointed out the surge in interest rates, which have risen from 9% to 13.5%, alongside increased expenses for fuel oil, electricity, gas, LC commissions, margins, discounting rates, and other charges, all of which have substantially inflated working capital requirements.
Alam further noted that electricity prices witnessed a 15% increase last year, with an additional 10% rise this year and further planned increments. Additionally, demand charges surged by 20%, while gas prices nearly tripled, adding Tk3 per tonne to production costs.
The association leaders criticised the 2% source tax deduction as excessive and disconnected from the actual profitability of the steel sector.
They highlighted that this minimum tax compels producers to pay income tax even in the absence of profits.
Furthermore, they emphasised the non-adjustable and non-refundable nature of the Tk500 per tonne minimum advance income tax on imported scrap.
During the press conference, the association presented a six-point demand aimed at rescuing the domestic steel industry, which is grappling with a 40% working capital shortfall due to the rising dollar.
The demands included converting short-term loans to long-term loans, extending up to 12 years, to address the working capital gap.
Boosting Letter of Credit (LC) facilities to 50% for the steel sector. Urging banks to consider 25% of non-funded liabilities (up from the current 15%) for steel companies when calculating credit limits.
Proposing a delay in the implementation of new electricity prices from February to March, and cancelling planned hikes for both electricity tariffs and minimum demand charges in the heavy industrial sector.
Lowering the tax deduction at source for steel companies from 2% to 0.5%, reducing the minimum advance income tax on imported steel scrap from Tk500 to Tk200 per tonne, and revoking the recent increase in the Ministry of Industries’ CM certificate fee.
The association leaders urged the government to implement a turnover-based fee structure.
Notably, prominent figures from leading steel industry players such as Anwar Group, BSRM, and Salam Steel attended the event, underscoring the industry-wide concern and unity in addressing these pressing issues.
