ISLAMABAD -  The government is not expecting a 'single penny' from the privatisation of Pakistan Steel Mills (PSM) as it wants to revive the loss-making entity by giving it to Chinese or Iranian investors on lease.

Minister of State for Privatisation Mohammad Zubair on Wednesday said that government is considering giving PSM on lease to Chinese or Iranian company to stop its financial bleeding and reviving the mill by starting production. However, it is very challenging to convince the foreign investors for offering PSM on lease due to its existing situation. He informed that losses of PSM have enhanced to Rs220 billion and its debt has soared to Rs150 billion as the mill is non-operational since June last year.

Briefing Senate Standing Committee on Finance, the minister said that cost of 14,500-acres of land of PSM is around Rs200 billion. "I am not expecting anything from the privatisation of PSM, as it value was determined at Rs23 billion in 2006 when the mill was in profit". He said the major issues of the PSM include large number of workers (around 15000) and old machinery and plants, which needs to be resolved.

Zubair said that federal government had offered the Sindh government to acquire the PSM in October 2015. However, nothing came out of it and federal government reinitiated the privatization of the Mill in July this year, he added.

Senator Kamil Ali Agha proposed the government to give Pakistan Steel Mills to Fauji Foundation for its revival. He said that Prime Minister Nawaz Sharif should recommend measure to revive the steel mills, as he has vast experience in this sector. Senator Mohsin Aziz of PTI presented some proposals for reviving the mill including restructuring it and transferring its employees to the other departments to lessen the burden of the workers.

Secretary Finance Dr Waqar Masood informed the committee that Pakistan's external debt has surged to $58.7 billion after the issuance of Sukuk bond worth one billion dollars in international market. However, the debt-to-GDP ratio has gone up to 64.9 percent and external debt-to-GDP ratio has come down to 20 percent in 2016 from 35 percent of 2013, he added. Sharing details of the China-Pakistan Economic Corridor (CPEC), he said that $11 billion out of total $46 billion is loan and rest would be spent by the private sector in power projects.

He briefed the committee on the issuance of bonds. The government had issued Eurobonds in international market worth two billions dollars in April 2014, which was followed by one billion dollar Sukuk bond in November 2014. Furthermore, it had generated $500 million from the Eurobond in 2015 and $1 billion in October 2016.

Masood said that government had offered the motorway land with all constructions and improvements on M-2 (Islamabad-Lahore) as a guarantee against Sukuk. The value of M-2 was determined at around $2.5 billion. The government issued Sukuk bonds worth one billion each in 2014 and 2016 by keeping M-2 as a guarantee. The government has still room of $500 million for issuing Sukuk bond by offering M-2 as a guarantee, he added.

Secretary Finance said that interest rate on Eurobond was 8.8 percent 2014, which is 5.5 percent on Sukuk bond issued last month. The country's economic situation had improved over the last three years, which helped in reducing the interest rate on bonds.

Senators, Fateh Muhammah Hassani, Mohsin Aziz, Mohsin Leghari, Kamil Ali Agha, Saood Majeed and Usman Saifullah Khan attended the meeting.