FBR's Rs5 Per Unit Electricity Tax on Steel Melters: Amreli Steels, Mughal Steel in Focus

The Federal Board of Revenue has notified 99 registered iron and steel manufacturers that will now pay an extra sales tax of Rs5 for every unit of electricity they consume, collected directly through the bills issued by their power distribution companies. The measure, issued under SRO 1245(I)/2026 dated July 31, targets melters, re rollers and composite units whose imported scrap made up more than 70 percent of their eligible scrap purchases over the preceding 12 months.

What the FBR's Rs5 Per Unit Electricity Tax Changed

Steel making from scrap relies on induction furnaces that consume large amounts of electricity to melt metal down before it is rolled into finished products such as rebar. The FBR's notification adds a fixed sales tax charge on top of the normal electricity bill for manufacturers that meet its import threshold, effectively raising the cost of running those furnaces for companies that lean heavily on imported scrap rather than local supply. The FBR has said the list of notified manufacturers may be revised over time as it reviews import data.

Why the New Tax Matters for Steel Melter Stocks

This is a targeted cost measure rather than a broad tax that hits every business equally. It falls specifically on manufacturers whose raw material sourcing crosses a defined import threshold, which means the companies most exposed are long steel producers that depend on imported scrap to run their furnaces. For a business where electricity already makes up a meaningful share of production cost, a per unit charge collected automatically through the power bill is harder to avoid or delay than a tax assessed at year end, since it lands on every bill regardless of the company's own profitability that month.

Which Stocks, and Why

Amreli Steels and Mughal Iron & Steel both run scrap fed induction furnaces to produce long steel products like rebar, and both source a meaningful share of their scrap from imports alongside local scrap dealers, which puts their cost structure closest to what this notification targets. The FBR has not published the names of the 99 notified companies, so it is not confirmed that either firm is on the list, but the profile the notification describes, scrap melters with heavy import dependence, matches their business closely enough to expect at least some added cost pressure. International Steels sits outside this specific measure since it rolls imported flat coil rather than melting scrap in a furnace, so its cost exposure here is minimal.

What to Watch

Investors should watch whether Amreli Steels or Mughal Iron & Steel disclose any impact from this notification in their next quarterly results, since that would confirm whether either company is among the 99 registered manufacturers named by the FBR. Also worth tracking is whether steel makers can pass this added electricity cost through to rebar and long steel prices without hurting demand, since construction activity and cement dispatches tend to move together with steel demand and give an early read on whether cost increases are being absorbed by builders or by the mills themselves.