The start of GSII’s full commercial operation is supposed to trigger the imposition of the approved increase in tariff rate on hot and cold rolled coils that will be produced by GSII.
However, according to government sources, GSII must inform the Tariff and Related Matters (TRM) committee once the firm is commercially operational.
The TRM would then have to verify that GSII is really commercially operational before it allows the effectivity of the tariff increase on HRC and CRC from the current zero percent to seven percent.
The TRM had agreed last year to raise the tariff rate on HRC and CRC to seven percent while maintaining the zero percent tariff rate on tinplates.
However, the new rates would not become effective until GSII starts commercial operations around June 2005.
GSII had claimed, though, that it is already commercially operating after undergoing rehabilitation since February last year and after completing the sale of NSC assets from the commercial bank creditors to Global Infrastructure Holdings Ltd. (GIHL).
The tariff increase is supposed to protect the newly rehabilitated GSII which would provide much needed employment in Iligan, while also heeding the clamor of local tin can manufacturers not to raise the cost of tinplates which is used to make tin cans for food products.
Downstream steel industry players are opposed to the tariff increase arguing that they would be adversely affected by a rise in tariff rates since GSII does not have the capacity to provide the needs of the local downstream industries.
Even in the past, the downstream steel industry players said, NSC/GSII was never able to be competitive even with tariff protection and only penalized the local downstream steel industry players through higher prices.