Govt Decides to Scrap Privatization of Pakistan Steel Mills

Staff Report

The government has decided to scrap the privatization of Pakistan Steel Mills (PSM) due to a lack of interest in Chinese companies in the wake of the declining demand for steel globally.

However, its future will be decided by the Special Investment Facilitation Council (SIFC).

The Senate Standing Committee on Industries and Production was informed here that four Chinese companies had expressed interest in the bidding process for the PSM.

But due to the global decline in steel demand and adverse economic conditions, three companies withdrew their interests.

Chairperson of the committee Senator Khalida Ateeb, inquired about the future of the steel mills after it was taken off the privatisation list.

Jawad Paul, Secretary Privatisation Division, briefed the committee and said that the PSM was included in the Privatisation list on June 17, 2019.

However, the Privatisation Commission Board in its meeting held on October 6, 2023, decided to halt the privatisation process.

This decision was made because having only one bidder raised concerns about transparency.

Mr Paul said that the decision of the Privatisation Commission Board has been forwarded to the Cabinet and after the approval of the federal capital the Ministry of Industries and Production will be the line ministry of the PSM to make it operational.

The committee was informed by the officials that a Technical Due Diligence report has indicated that a significant investment was required to restore the Pakistan Steel Mills Plant to its original capacity to produce 1.1 million tonnes of iron and steel per annum.

Meanwhile, the officials of the PSM informed the committee that the state-owned entity was incurring an annual loss of around Rs30 billion and it had more than 3,000 employees with only three officers including the acting chief finance officer, acting general manager, and an acting chief engineer.

The officials informed that while there were 589 staff in the security department apart from the rangers the steel mill was suffering a yearly loss of Rs12.8 million due to thefts.

The committee members expressed dissatisfaction with the lack of implementation of its earlier recommendations to control the theft in the PSM.

While Senator Khalida Ateeb belonging to the MQM acknowledged that the thefts have been controlled she expressed dismay that the management of the PSM had failed to take the culprits to task.

Later talking to the media she said that everybody in the PSM was involved in thefts and there has to be an inquiry.

“When Dr Juneju was the CEO the committee was informed that one person was involved in the theft of copper worth Rs10 billion and that official had been terminated from the job – the Committee had directed that instead of terminating the service a case has to be lodged against such people, but they did nothing,” she said.

She added that the secretary of Industries has been directed to record all the inventories to determine any such loss in the future.

The Committee also directed the Ministry of Industries and Production to present their plans for the future of PSM at the next meeting.

The PSM faced shutdown in June 2015, whereas in the last fiscal year 2022-23 iron and steel products worth around $1.89bn were imported into the country.

Later talking to the media, a senior official of the Ministry of Industries said that the direction was clear and the cabinet is expected to approve the shifting of PSM from the privatisation commission to the Ministry of Industries.

Apart from the stocktaking of the PSM, the Ministry of Industries will initiate the process of hiring a CEO for the PSM, followed by its Board meeting to determine the future course of action.PSMC shareholders question debt settlement deal with SSGC against land

Meanwhile, the matter will also be taken up at the SIFC to assess the cost of production at the PSM and seek a viable solution for its revival.

“This is essential to ascertain the outflow of foreign currency when the production starts at the PSM because many raw materials too are imported to be consumed by the steel mills,” the official added.

The committee also discussed the role and functions of the Sugar Advisory Board (SAB), and it was informed that the Board provides input on sugar demand, sugarcane production, and estimated prices of sugarcane and sugar in the country.

The meeting was attended by Senator Saifullah Sarwar Khan Nyazee, Senator Fida Muhammad, and Senator Zeeshan Khanzada, along with senior officials.