Pakistan Steel Mills (PSM) has sought immediate release of Rs 8.2 billion for payment of salaries and utility bills, besides repair of the plant. Speaking at a press conference here on Thursday, PSM Chief Executive Officer Major General Zaheer Ahmed Khan (Retd) said that the Mill immediately required some Rs 4.5 billion for payment of salaries and utility bills, while an amount of Rs 3.7 billion was needed for revamping of some 35-year-old plant.
"We have already approached the federal government for more funds and the Economic Co-ordination Committee of the Cabinet is likely to take decision on our request in its next meeting," he informed. Speaking about the previous bailout package, he said that although the federal government had disbursed over Rs 18 billion during the last one year, however, delay in release of these funds resulted in more financial burden on PSM and delay in achieving the production target.
"The ECC approved the bailout package in its meeting on 25th April 2014 and as per Business Plan, Rs 18.5 billion was to be released in three tranches to raise the PSM's production capacity to 77 percent in six months. However, the funds were released in the end of June 2014 instead of the first week of May 2014. Resultantly the iron ore was received in the third week of September 2014, which pushed the production to 20 percent in the first month and the 77 percent production capacity is likely to be achieved in April 2015," he informed
The PSM CEO said that with the support of the bailout package, the PSM's production capacity had been lifted from 6 percent to 49 percent on January 7, 2015, when low gas pressure first scuttled the momentum followed by nation-wide electricity shutdown on January 25, 2015. Despite these challenges, the PSM had achieved an average 24 percent production in January 2015.
He said that power failures had twice affected Pakistan Steel's efforts to achieve its production capacity targets. In July-August 2014, tripping of Gharo Water Pumping Station seriously affected the water supply and brought 110 MG reservoirs to near zero level, halting the Blast Furnace operation for about 20 days. While in Jaunuary 2015, the nation-wide power breakdown stopped PSM's both Blast Furnaces for many days, baldy affecting the production. On January 7, 2015, a sudden reduction in gas pressure to 1.4 kg/cm2, resulted in stoppage of blast furnaces, affecting the Mill's production for 10 days.
The Blast Furnace-2 (BF) was recovered within 10 days, while BF-1 was still under normalisation and likely to start production next week, he added. Replying to a question, he said that the investment of Rs 18.5 billion would result in a reduction of losses by Rs 9 billion in FY15 and another reduction of Rs 20 billion in losses in next financial year with respect to base year FY14.
"The bailout package helped revive and turnaround a moribund plant worth billions and having an experience of 35 years in steel technology which was close to falling apart due to gross neglect of thousands of pieces of equipment including vital blast furnaces, steel converters, rolling mills and power turbines," he added.
He said that the reason for gradual and slow ascent in capacity utilisation, besides, major problems, was related to BFs and Waste Heat Boilers of steel converters. The major iron making plant BF-1 was incapacitated on October 8, 2014 due to metal leakage because of old age and overdue capital repair. However, it was repaired in 8 days using Pakistan Steels deep in-house engineering expertise on war footings and brought into operation by October 31, 2014.
The 2nd Blast Furnace had been closed down after a metal leakage in August 2013. Its salvaging considered impossible locally, was undertaken and finally was brought into operation in the second week of December 2014 with nominal cost with local expertise, saving over Rs 1 billion and 1 to 2 years time required to put it right through foreign expertise.
With repair of both BFs, now achieving break-even capacity utilisation of 77 percent was possible in April this year, the PSM PSM said. He said that some 110 MW Thermal Power Plant of Pakistan Steel Mill comprised of 4x boilers, 4x turbo generators (TG) and 3x turbo blowers (TB) and these all needed capital repairs.
Talking about the manpower, he said that fast depletion of experienced technical manpower had created huge imbalance in plant operation. This vacuum was temporarily plugged and various measures were taken to fill the gap and meet immediate requirement. However, for reliable operation of the plant, regular manpower had to be inducted, he added. In addition, a number of development projects were being undertaken to enhance indigenisation and reduce costly imports, he said.
The CEO said that the present management of Pakistan Steel was striving hard for the revival of this national asset and contribute towards economic growth and prosperity. At present PSM was on its way to achieve its targets and the production capacity was gradually increasing as per business plan, he added.
Earlier, addressing a Suppliers Conference 2015 at Metallurgical Training Centre (MTC-Auditorium), Major General Zaheer Ahmed (Retd) said that the PSM management gave due importance and value to all its suppliers and especially those who had been engaged with PSM since long, as the management felt that the suppliers were part of our team in achieving our organisational activities.
"PSM Management encourages the reputed suppliers to participate in PSM tenders with healthy bidding competition and to get good quality supplies at economic prices as per PPRA Rules and Procedures," he added. Engr Absar Nabi, APEO (BMR&E/P&S/HRD), briefed the participants that the PSM management followed PPRA Rules in transparent manner, like tender advertisements in the newspapers and on PSM and PPRA official Websites, tender openings in presence of the participating bidders by designated committees, technical evaluation committees including experienced engineers, publishing of bid evaluation reports of tenders on PSM Website and placement of Purchase Orders to the successful lowest bidders in a transparent manner. Wasif Mehmood, Director Operation, PSM, was also present on the occasion.
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