ISLAMABAD: A Russian state enterprise has offered Pakistan a comprehensivepackage for reviving the troubled Pakistan Steel Mills (PSM), whichincludes a loan for balancing and modernisation of the large industrialcomplex.
The Russian firm has claimed that it will turn the steel mill financiallyviable, enabling it to pay salaries to its employees in a year’s time whileimplementing a revival plan submitted to the Ministry of Industries andProduction.
Governments of Pakistan Peoples Party (PPP) and Pakistan MuslimLeague-Nawaz (PML-N), which had separately been in power from 2008 to 2018,failed to efficiently run PSM as its financial condition deterioratedpersistently over the years. Now, the mill has shut down with lossesexceeding Rs200 billion.
PSM, which owes Rs19 billion to Sui Southern Gas Company (SSGC) for gassupply, had been operating at average 33% of its capacity during thePML-N’s tenure in 2015 when the public gas utility suddenly cut off supply.Since then, the mill has not been running and its losses have continued tomount.
In the revival plan sent to the Ministry of Industries, which shared itwith an expert group working on the revival of PSM, Russian stateenterprise Tyazhpromexport said it had already offered a loan for abalancing and modernisation programme along with expertise for running themill.
However, the offer had been ignored and later the company submitted aconcept paper for reviving the mill.
The Russian giant has proposed the establishment of Pakistan Steel MillsHolding (Private) Limited and five subsidiaries including PSM COBP(Private) Limited, PSM Power Plant (Private) Limited, PSM Rolling Mills(Private) Limited, PSM Steel Making (Private) Limited and PSM Iron Making(Private) Limited.
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Repair and modernisation work will be undertaken complex-wise. Citing anexample, the Russian company said COBP was currently up to date and as suchwas fully functional. Once it became an independent company, it would carryout operations on its own by selling services, products and byproducts fromthe plant, it said.
Likewise, the proposed power plant has generation capacity of 165megawatts, but it needs to be upgraded and modernised, which requiresinvestment. The electricity generated by the plant will be sold to othercomplexes of the steel mill and K-Electric.
The funds generated would go to operational expenditures and credit may beprovided for upgrading and modernisation of the mill, it proposed.
The Russian company also suggested that an agreement may be inked with theoriginal equipment manufacturers or a government-to-government agreementmay be reached under which the plant may be upgraded and credit may beprovided against sovereign guarantee with payback period of seven years orany other period.
On the same pattern, the entire mill may be revamped, upgraded andmodernised.
