ISLAMABAD – Even after being provided a massive financial bailout package worth Rs 21.5 billion during the last two fiscal years, the Pakistan Steel Mills (PSM) is still incurring losses of Rs 9 billion per annum.
A source at the Ministry of Industries said the government had already provided Rs 6 billion in cash to the PSM while giving a sovereign guarantee of Rs 15.5 billion to commercial banks. However, he said, the state-owned entity was still in the red, as it was causing a loss of Rs 9 billion per annum to the national exchequer.
He said despite best efforts, the PSM was operating on 45 percent of its capacity to produce 1.1 million tonnes of steel per annum. “The company can achieve breakeven only if it operates at 70 percent of its capacity.” He said the PSM management was lobbying to get approved a revamping and expansion plan by the government to make it self-sufficient in the future.
The short-term balancing, modernisation and restructuring (BMR) envisaged enhancing production capacity from 1.1 million to 1.5 million tonnes and required a financing of Rs 20 billion. While the PSM expansion from one to three million tonnes required investment of $1 billion. Under the present conditions, the government was not in a position to make any investment in the BMR or expansion and PSM had been asked to come up with concrete proposals to seek investments.
Meanwhile, a statement issued by the Ministry of Industries said Minister for Industries Mir Hazar Khan Bijarani had formed a Joint Working Group (JWG) for the speedy process of revamping and expansion of PSM. The decision to form JWG was taken at a meeting on expansion and revamping of PSM on Tuesday.
PSM Chief Executive Wasif Mahmood told the meeting that they had received expression of interests (EOIs) from 10 internationally-renowned firms for the expansion of the mills. Of these 10 firms, six were from China, two from Russia and one each from Italy and Austria.
PSM had already floated a tender for hiring services of a consultant to evaluate the EOIs and to make the whole process more transparent. The tender was opened on March 22 wherein two international firms China Metallurgical Engineering and Project Corporation and its local agent Commodities Trading Company Karachi and McLellan and Partners Limited United Kingdom and its local agent Pi Pakistan have submitted their offers.
