PSM's total losses surpass Rs600 billion; the chairman reveals an annual interest payment of Rs20 billion.
The sale of Pakistan Steel Mills (PSM), a state-owned enterprise that has been dormant since 2015, has been halted after three Chinese companies withdrew their Expressions of Interest (EoIs) due to the mill’s severe financial troubles, mismanagement issues, and Pakistan’s challenging economic and regulatory environment.
The mill, which owes Rs89 billion to the National Bank of Pakistan (NBP), has accumulated a cumulative loss of Rs600 billion as of 2024. PSM pays an annual interest of Rs20 billion, most of which is used for its expenditure, including salaries of its 934 current employees.
A committee, headed by Senator Aon Abbas, visited the PSM in Karachi and toured different plants. The committee expressed displeasure over frequent thefts in PSM and directed authorities to evaluate the losses due to theft. They also discussed the grievances of current PSM employees.
The committee includes Senator Syed Masroor Ahsan, Senator Khalida Ateeb, and Senator Husna Bano. They met with the worker union representatives of PSM and suggested speeding up the fate of the steel mills.
In light of the challenges faced in the sale process, Pakistan appears to be shifting focus towards establishing a new steel mill through cooperation with Russia rather than continuing with the prior attempts at sale to Chinese firms. Talks with Russian officials for a new steel mill project in Karachi suggest a strategic move to revive the steel industry with fresh foreign investment and different partners.
Two plans are being considered by the government for PSM: one involves reviving the mill through Russian Industrial Engineering LLC, and the other plan involves liquidating the PSM after hiring an evaluating firm. A sub committee was formed to review the reservations of the employees. The committee expressed reservations on the allotment of PSM’s undisputed and entitled land to the Goths by the Sindh government. They were informed about arbitrary allotment of PSM land by the Sindh government in the past few years.
The committee, in its efforts to speed up the process, suggested speeding up the liquidation of moveable assets of PSM that are no longer in working condition or have aged their life. This includes the sale of assets that are no longer contributing to the mill’s operations.
The PSM Chairman, Asad Islam Mahni, shared this information with the Senate Standing Committee on Industries and Production. The committee, in its visit to PSM, aimed to assess the current state of the mill and identify potential solutions to revive it. The committee's efforts are a step towards addressing the financial and operational challenges facing PSM and reviving the steel industry in Pakistan.
- The Pakistan Steel Mills (PSM) is currently facing a debt of Rs89 billion to the National Bank of Pakistan, and an annual interest of Rs20 billion, a significant portion of which is used for debt servicing, including employee salaries.
- The PSM's financial situation has led to the withdrawal of interest from three Chinese companies involved in its sale, highlighting the challenges posed by the mill's severe financial troubles and mismanagement issues.
- The stakeholders discussing the future of PSM now seem to be considering two plans — one to revive the mill through Russian Industrial Engineering LLC, and the other to liquidate the mill after hiring an evaluating firm.
- The committee's focus is not only on identifying potential solutions for the revival of PSM but also on speeding up the liquidation of non-operational moveable assets, such as aging or non-functional equipment, to infuse new life into the mill's operations and revive the steel industry in Pakistan.
