The government has approved the supply of up to 40 million cubic feet per day (MMCFD) of gas to National Steel Complex Ltd (NSCL), formerly Tuwairqi Steel Mills Ltd (TSML), paving the way for the revival of the long-idled steel project after years of disputes and failed international arbitration against Pakistan, Business Recorder reported, citing sources close to the petroleum minister.
Sources said that the Economic Coordination Committee (ECC) recently approved a summary submitted by the Petroleum Division allowing Sui Southern Gas Company Limited (SSGCL) to provide gas for industrial processing and captive power generation at notified industrial tariffs, subject to availability.
The ECC decision will now be placed before the Federal Cabinet for ratification.
TSML was established in January 2013 with an annual production capacity of 1.28 million tonnes and was jointly financed by Al-Tuwairqi Holdings of Saudi Arabia and South Korea’s POSCO.
The plant was based on Direct Reduced Iron (DRI) technology using the MIDREX process owned by Kobe Steel of Japan, which relies heavily on natural gas as feedstock.
The government had originally allocated gas to the project in 2005, while SSGCL signed a Gas Sales Agreement in August 2006 for supply of 45 MMCFD gas, including 40 MMCFD for industrial processing and 5 MMCFD for captive power generation.
However, after starting operations in January 2013, the plant shut down within months after seeking gas supply at subsidised fertiliser feedstock tariffs instead of industrial tariffs applicable to the project.
At the time, industrial gas tariffs stood at ₨488 per MMBtu compared to fertiliser feedstock tariffs of ₨123 per MMBtu. Officials estimated that provision of subsidised gas would have caused around ₨5 billion in revenue losses to SSGCL through cross-subsidisation.
The initial gas agreement expired in 2016 without renewal, while the original gas allocation also lapsed.
In 2018, Saudi sponsors initiated arbitration proceedings against Pakistan at the Permanent Court of Arbitration in The Hague, seeking $500 million in damages under Organisation of Islamic Cooperation investment agreements.
The tribunal ruled in favour of Pakistan in December 2023, dismissing all claims and directing claimants to bear legal and administrative costs.
Meanwhile, management control of the steel plant shifted to United States-based Ciena Group in April 2022, after which the company was renamed National Steel Complex Ltd.
The project’s revival later came under consideration at the Special Investment Facilitation Council (SIFC).
During multiple Executive Committee meetings between 2023 and 2024, Petroleum Division was directed to explore gas allocation options of up to 50 MMCFD for revival of steel production.
According to sources, SSGCL was later instructed to issue a bankable commitment letter for the supply of 45 MMCFD gas at standard industrial tariffs for an initial period of 10 years, extendable by another decade.
SSGCL issued the commitment letter in November 2025, confirming system capacity for gas supply at Oil and Gas Regulatory Authority-notified tariffs, subject to approvals.
Officials stated that ECC had earlier revised the natural gas allocation priority framework in September 2024, placing industrial process gas alongside domestic and commercial sectors in the highest priority category.
Under the revised framework, NSCL qualified for gas supply as a major industrial project.
The Petroleum Division subsequently proposed allocation of up to 40 MMCFD gas for industrial processing and captive power generation at applicable industrial tariffs and levies, while directing both parties to finalise terms of the Gas Sales Agreement based on approved volumes.
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