ISLAMABAD: A group of experts has suggested that the government should neither run Pakistan Steel Mills (PSM) as a state-owned enterprise, nor should it privatise the mill as it is a strategic asset of the country.
A report prepared by the expert group has recommended that the government should turn PSM into a public-private partnership and seek to revive it in the first phase, to be followed by its upgrade in the next phase.
Talking to a select group of media on Tuesday, Adviser to Prime Minister on Commerce, Industries and Production Abdul Razak Dawood said, “It has been repeatedly proved that the government cannot run business and the debacle of steel mill privatisation is one such example.”
He pointed out that PSM’s blast furnace had not been functioning due to a sudden halt to gas supply in 2015, which, as a result of iron ore sludge, turned into a 13-feet high rock.
PTI govt to consider strategic partner for PSM revival
“However, the mill can still run with the help of raw material brought from other sources,” he said, adding, “the steel mill is not like other heavy industries, including fertiliser units or oil refineries, where everything is integrated.”
The expert group highlighted that PSM could be refurbished and the condition of its plant was not bad enough to be scrapped. There was a suggestion to build a new but advanced blast furnace while the rest of the units should continue to produce finished goods, Dawood said.
Regarding the timeline to restart the process, he said several procedural formalities had to be completed.
The Economic Coordination Committee (ECC) was set to grant formal approval to the report in its next meeting and a summary would later be sent to the cabinet for final approval, the media was informed.
After the cabinet’s nod, the next step will be the hiring of a transactional adviser in order to set parameters for the public-private partnership. “We already have three Chinese and three Russians vying for PSM; the adviser will help evaluate and finalise the contract,” he said. “We do not have the money to revive or upgrade the steel mill to take its production level to three million tonnes per annum from its current capacity of 1.1 million tonnes,” the adviser disclosed.
He said the other benefit of opting for the public-private partnership was that the strategic partner would not cave in to the political pressure such as the hiring of 5,000 unskilled employees in 2008-09 by the Pakistan Peoples Party (PPP) government.
“We hope the international investors will have the expertise to modernise the plant,” he added.
The report highlighted that steel demand in Pakistan stood at around nine million tonnes per annum with annual growth of around 14-15%.
The report also suggested that the new PSM management should consider upstream sector development along with the downstream industry.
“The upstream development is aimed at improving the consumption of iron ore, coal, etc, whereas the downstream development will help diversify the product range,” stated the PM aide.
Published in The Express Tribune, April 10th, 2019.
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