The federal government has decided to revive Pakistan Steel Mills (PSM) on Public Private Partnership (PPP) in two phases within 18 months through International Competitive Bidding (ICB) mode without trimming the present work force. This was stated by the Prime Minister''s Advisor on Commerce, Textile, Industries and Production and Investment, Abdul Razak Dawood during an informal meeting with a group of media persons. The newly-appointed Secretary Industries and Production, Aamir Ashraf Khawaja, was also present on this occasion.
On April 8, 2019, Economic Coordination Committee (ECC) of the Cabinet approved the report of Experts Group headed by Khalid Mansoor of Hub Power Company and comprising CEO Engro, Rohail Ahmad, Kamran Kamal CEO Laraib, Saleem Ullah Memon CEO Thar Energy, Zulfiqar Hub Power and Syed Muhammad Ali of JS Energy in principle and now both the Ministry of Industries and Production and Privatisation Commission will submit a summary to the ECC for formal approval, after which the federal cabinet will accord its approval.
"We have to revive the mills by making it internationally competitive. In the first phase PSM will be revived at 1.1 millions tons per annum and in the second phase its capacity will be enhanced to 3 million tons per annum," he said.
Dawood further stated that the government will hire a Transactional Advisor who will give advice to the government for revival of PSM which was shut down by the PML-N government in 2015. The capacity of plant will be enhanced from 1.1 million tons per annum to 3 million tons peer annum for which an investment of $ 800 million to $ 1 billion will be required.
"There will be a financial advisors'' consortium which will formulate and submit a detailed revival plan," said an insider.
According to the PM''s Advisor, six international parties - three each from China and Russia - have shown an interest with some having already visited the PSM.
In the first phase, all operations of plant will be restored except the blast furnace which needs to be replaced as it is in a very bad shape as PSM administration did not apply "mouth balling" mechanism to shut down the plant.
Razak Dawood argued that enhancement of capacity of PSM from 1.1 million tons to 3 million tons is feasible as steel demand in future will be around 14-15 million tons per annum. The Experts Group noted that 15 per cent growth has been witnessed in steel products in the last few years. Presently, the liability of PSM is Rs 202 billion. Secretary Industries stated that the monthly expenditure of PSM is around Rs 1.3 billion.
"It is an integrated plant, we have to go for backward and forward mechanism and use local iron ore to manufacture other products in addition to what was being manufactured previously like Engro is doing in Thar coal-fired power plants," he stated. Razak Dawood further maintained that Pakistan Steel Mills can be upgraded and rebottled, adding that it is doable. However, rectification of blast furnace will take some time.
He said the Experts Group has recommended that PSM machinery is not in a condition to be declared scrap, however, the condition of blast furnace is not good at all. "The Experts Group has recommended that the plant should be run on PPP mode and should not be privatised," Dawood said, adding that it is a national asset so how could it be privatised.
Replying to a question about the future of 5000 employees hired and regularized by the PPP government, Dawood said that their burden has to be borne.
Answering another question about the PSM land, Dawood said that the party which will get the mills will be given only that part of the land which is within the vicinity of the plant and the remaining land will be given to other industries.
During a question-answer session, Dawood praised the integrity of the Experts Group when some members of the media raised the question as to why "the entire" work had been assigned to Hubco Group.
Dawood also brushed aside the accusations of conflict of interest, saying that he will leave the PSM''s revival plan if someone thinks like this.
In reply to another question, Dawood said that a case of PSM is already with the National Accountability Bureau (NAB).
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