PSM’s desperate bid to keep head above water

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KARACHI: The Pakistan Steel Mills (PSM) has decided to sell off its land to overcome its overwhelming financial compulsions with the National Bank of Pakistan (NBP)-led consortium of banks unlikely to lend it Rs seven billion, part of the Rs 25 billion bailout package announced by the government to rescue the cash-stripped entity.
The PSM board in its meeting held on October 7 decided to sell around 1,500 to 2,000 acres to the United Arab Emirates (UAE) or Qatar.
“The PSM is on the verge of shutting down, the situation remains untenable until it achieves vastly improved standards of production efficiency” said Senator Gul Mohammad Lot, one of the board members.
He said the current administration of the PSM is trying its level best to streamline the organisation, at a time when, “a government threat to close down the facility looms over them”.
“In this situation, the best option is to sell a portion of the PSM land in order to run it at levels of 75 percent efficiency … we are also looking forward to the proposed consortium of the banks to help the PSM.”.
The land would not be sold in minor parts to small parties but a deal would be struck with feasible investors, such as those based in UAE or Qatar so that around Rs 4 billion could be fetched to run the PSM efficiently.
The PSM is currently operating on a single battery and its CEO is negotiating with Russia to obtain a fresh battery, which would hopefully be installed by February next year.
“It has also been decided that the PSM will buy solely local raw material instead of importing from Iran and India; a desulphurization plant has been proposed to deal with the excessive amount of sulphur in the local raw material,” it was revealed.
The feasibility report of the desulphurization plant would be discussed in the board meeting next month. An in-house audit report of the PSM for the past three months to determine the profit and loss ratio of the mills is also likely to be drafted.
It is pertinent to mention that the government initially suggested a NBP-led consortium of banks to finance the mills, but sources intimated that private banks are reluctant to be part of such a consortium.
According to a rough estimate, the worth of the undeveloped land of the PSM is roughly Rs 1.4 billion. The previous government had formed the National Industrial Park, 900 acres of the land was demarcated for the PSM. The land was granted to the PSM, but not a single acre has been utilised in the past three years.