The Privatisation Commission on Tuesday approved a 30-year lease structure for loss-making Pakistan Steel Mills under which at least 7,500 of the 12,500 employees would be laid off, its head said.
Built by the Soviet Union in 1970s, the state-owned facility (PSM) has become a huge drain on government resources and has not produced steel at its 19,000-acre facility since June 2015.
That was when the national gas company cut its power supplies, demanding payment of bills of over $340 million.
PSM has accumulated losses of over Rs163 billion ($1.56 billion) and other outstanding debts.
Privatisation Commission Chairman Mohammad Zubair told Reuters a 30-year lease plan had now been approved, with Chinese and Iranian companies showing "interest" in taking over the vast factory on the outskirts of Karachi.
He declined to name the interested firms.