ISLAMABAD: The PML-N government seems in no mood to revive ailing Pakistan Steel Mills before its privatization, as the PSM has been standstill in last six months due to the suspension of gas supply. 

The PSM production is at zero level since July this year as Sui Southern Gas Company Limited (SSGC) had disconnected the gas supply to the PSM due to the non-payment of bill worth Rs35 billion.

"The federal government is not in position to get gas supply to PSM restored by clearing its due bill, but it is continuously paying salaries to the workers of it from its own resources," said an official of the Ministry of Finance talking to The Nation.

Pakistan Steel Mills was a profitable entity during the fiscal year 2007-08, as the Mill earned profit of Rs9.5 billion. Since then, Pakistan Steel Mills turned into loss making entity and its accumulated losses and liabilities swelled to Rs350 billion, including Rs160b in losses and Rs190bn in payable debt liabilities.

The successive governments injected billions of rupees into PSM to revive the public sector entity in last several years, but all went in vain. Pakistan had committed with International Monetary Fund (IMF) to privatize the Pakistan Steel Mills by the end of June 2016. The government has failed to enhance the PSM capacity to 77 percent despite giving bailout package worth Rs22 billion, as the mill is still not operational.

The federal government from its own budget is providing salaries to 15,274 employees of the PSM. The Economic Coordination Committee of the Cabinet in November approved two months salaries to Pak Steel Mills employees.

"We had planned to privatize the PSM," said Privatization Commission's official. The Cabinet Committee on Privatization (CCoP) in early October offered Sindh government to acquire the Pakistan Steel Mills (PSM) with all its assets and liabilities.

"Sindh government had not replied to the offer of the federal government as they had formed a two-member committee to discuss the proposal," said the official. He further said that government would go for the foreign investors after getting response from the provincial government.
Federal government would look for Chinese or Russian investment in PSM if Sindh officially refuses to acquire the mill.

The Privatization Commission had already held roadshows in China for the privatization of the PSM. Chinese Metallurgical Group Corporation (MCC) had also expressed interest to participate in the privatization of the PSM. MCC wants to revamp the mills and install a new plant to increase its total production capacity to five million tons. Similarly, Russia has also shown interest in PSM.

The Nation tried to contact Minister of State/Chairman Privatization Commission Mohammad Zubair, to take his comment on issue, but was not available.

Pakistan Steel Mills was established at 4500 acres of land, while total land belonging to PSM is 19000 acres. The proposed privatization structure does not include 14500-acre land, which is outside the premises of the mill building. The PSM is the only integrated steel plant of the country with a production capacity of 1.1 million tons per year, expandable up to 3m tons. The PSM, set up in 1984, has a workforce of 15,274 and has 20 industrial units.