A top ranking BoI official said that GSPI has asked for certification from the BoI that they are already in commercial operation.

The official explained that under the BoI rules, as long as the company started selling its products that already means it is in commercial operation although a company is deemed to be making money only once it reaches 85 percent capacity utilization.

Earlier, the company said it has exported cold rolled coils to China when the company took over the former National Steel Corp. in 2003.

The start of commercial operation is also crucial to a BoI-registered enterprise because that is the reckoning date as to the start of its availment of incentives particularly the income tax holiday.

The certification of commercial operation is also crucial in relation to the company’s push for higher tariff rates on imported steel products. Global Steel earlier said it would be in commercial operation in June but the CTRM has not yet received any invitation to conduct the ocular inspection of the Iligan plant.

Under Executive Order 375, the tariffs on imported steel would revert to a high of 7 percent from the present 3 percent once Global Steel is already in full commercial operation.

But the source said BoI certification of commercial operation would be different from the Committee on Tariff and Related Matters (CTRM), which is going to determine the company’s commercial operation for purposes of tariff rate. What the BoI is trying to safeguard is that its certification could not be used for purposes other than the incentives availment.

It could be recalled that the steel company has a pending request for government guarantee for its million loans.

Recently, Global Steel chief operating officer B.S. Mohnani also said it is negotiating with US and European companies – Toyota Tyysuo, CMC (International), A.G. Sumitomo and Marcegagila for the exports of hot-rolled coils (HRC).

"We are in the process of concluding sales agreements. When exports begin, it will be the first time after restart of the plant by Global Steel that the Philippines will export HRC to the EU and US," Mohnani said in a statement.

Operation of its HRC line is crucial to the company’s lobby for tariff protection against imports. This is in addition to its CRC production.

Once fully operational, the plant will have an annual production capacity of 1.2 million tons of different steel products.

The steel manufacturing project is also registered with the Philippine Economic Zone Authority as a special economic zone. As such, Global Steel is entitled to income tax holiday of as much as six years and tax and duty-free importation of capital equipment, among others.

It could be recalled that Global Infrastructure Holdings Ltd. of the Ispat Group of India bag the NSC rehabilitation and operation project in 2003 with its P13.225 billion bid offer to be paid over an 8year period.