ISLAMABAD: The government has decided to cancel the privatisation of Pakistan Steel Mills (PSM) due to waning interest from Chinese companies, largely influenced by the declining global steel demand.
The Senate Standing Committee on Industries and Production met here with Senator Khalida Ateeb in the chair and was informed that initially, four Chinese companies had shown interest in bidding for PSM. However, due to unfavourable global steel demand and economic conditions, three of these companies withdrew their bidding. This raised concerns about transparency, as there was only one bidder left.
While briefing the committee, Jawad Paul, Secretary of the Privatisation Division, said that after their response, the PC Board decided to stop the privatization process in its meeting on October 6, 2023. The decision was forwarded to the cabinet for approval. If approved, the Ministry of Industries and Production will oversee the operations of PSM.
A Technical Due Diligence report indicated that a significant investment is needed to restore the PSM to its original production capacity of 1.1 million tonnes of iron and steel per year. The PSM has been incurring an annual loss of around Rs30 billion and has over 3,000 employees, with only three officers. Theft has been a major issue, with an annual loss of Rs12.8 million attributed to thefts. The committee expressed dissatisfaction with the lack of implementation of its earlier recommendations to control theft at the PSM.
The Ministry of Industries and Production has been directed to present its plans for the future of PSM at the next meeting. The PSM faced a shutdown in June 2015, and in the last fiscal year, iron and steel products of approximately $1.89 billion were imported into the country. The cabinet is expected to approve the transfer of PSM from the Privatization Commission to the Ministry of Industries, and the Ministry will initiate the process of hiring a CEO for PSM.
The matter will also be discussed at the SIFC to assess the cost of production at PSM and seek a viable solution for its revival.
