ISLAMABAD  - Mian Manzoor Wattoo, Advisor to Prime Minister said on Friday that production capacity of Pakistan Steel Mills (PSM) needs to be increased to 1.3 MT per annum to make it more viable and meet increasing demand of steel in the country. He said this while chairing a meeting on expansion plans of PSM here today. The Meeting was also attended by Chairman PSM Moeen Aftab Sheikh and senior officials of MOIP&SI. He further said that under the current expansion plan, by end of current year, the production capacity would increase to 1.3 Million Ton per Year (mtpy) from the current 1 mtpy. Wattoo said that under the second phase of expansion plan, by end of 2010, the capacity will increase to 1.5 mtpy. He further informed that total increase in production during the current year will be 1 lac ton and capacity utilization will increase to 91 % from current 82 %. To implement the expansion plan effectively it is necessary that PSM is removed from privatization list said; Mr. Wattoo adding that PSM is a national asset and it should not be privatized. He assured the PSM administration that he will recommend to the Prime Minister that PSM should be de listed from the privatization list. Meeting was told that PSM spent Rs. 25b during the current year on the import of iron ore and coal and the cost could rise to Rs. 30m in the next year owing to increasing prices in world market and increasing freight charges. Mian Manzoor Ahmad Wattoo stressed that every effort should be made to utilize local raw material and PSM should plan that of the total raw material being used at least 20 % should be local. It will help in reducing the cost of production besides giving employment to the poor and generate economic activity locally, Wattoo said, adding that incentives and technical know-how should be given to the owners of mines and local people so that extraction and processing can be done on fast track. He instructed PSM administration to focus on Balochistan in this regard. The meeting was told that a meeting has already been held between PSM, MOIP&SI and Balochistan government in this regard and a similar meeting with NWFP government will be held in coming weeks and with other provinces will follow shortly so that more local raw material can be utilized. Mian Manzoor Ahmad Wattoo assured that MOIP&SI will fully assist PSM in its expansion plans and the plan to utilize local raw material. He told he himself along with officials of MOIP&SI will meet provincial governments so as to expedite and maximize the utilization of local raw material.