Govt to scrap PSM, repurpose land

Planning to establish a new steel mill in collaboration with Sindh govt

ISLAMABAD:

The PML-N led federal government has decided to scrap the loss-making Pakistan Steel Mills (PSM) and allow the Sindh province to use its land for general industrial purposes. 

The government is also considering setting up a new steel mill in collaboration with the Sindh government on the PSM land. These decisions have been backed by the Special Investment Facilitation Council (SIFC).

The Shehbaz Sharif government has directed the Ministry of Industries and Production to submit a plan, including a proposal for setting up a new steel mill on the PSM grounds. 

It has also decided that the Sindh government may be allowed to use the PSM land for general industrial purposes. The Government of Sindh can ensure the mutation of the remaining 1,683 acres of un-mutated land of the sick industrial unit.

The government has directed the Ministry of Industries and Production to ensure the clearance of encroached PSM land and resume its possession. A committee will be notified to oversee the matter. The Ministry of Industries and Production will present a comprehensive plan to establish an export promotion zone (EPZ) or a special economic zone (SEZ) on the entire PSM land.

The SIFC has also directed the ministry to allocate/earmark land for the establishment of a new steel mill in collaboration with the Government of Sindh.

The PSM was closed in 2015 during the rule of the PML-N. At that time, the PSM was set to achieve record production and had committed to clearing all current and pending gas dues when its gas supply was disconnected. 

For the last nine years, the mill has not operated. The previous PTI government also considered different plans to hand over the mills to Chinese companies, but these plans did not materialize.

Though production at the PSM halted in 2015, it has been receiving 2 million cubic feet per day (mmcfd) of gas primarily to preserve the coke oven batteries and refractory kilns. 

Recently, the PSM received a disconnection notice from the Sui Southern Gas Company (SSGC) due to its failure to pay gas bills. Later, the Ministry of Industries approached the Economic Coordination Committee (ECC) informing it about the SSGC’s notice to the PSM.

A gas supply of around 2 mmcfd is necessary to keep the plant and machinery intact. In case of a gas disconnection, the coke oven batteries would collapse, and the PSM would suffer huge losses. 

The Petroleum Division supported the proposal to clear these gas dues and requested that the pending amount of the gas bill be cleared till June 2024.  The Finance Division had no objection to clearing liabilities already accumulated if approved by the ECC. The Finance Division further requested that the ECC be apprised of the future plan of action with regard to the PSM.

It was informed to the ECC that a committee of relevant stakeholders had been constituted on April 24, 2024, under the chairmanship of the Secretary of Industries to deliberate and decide on the future of the PSM. 

However, Prime Minister Shahbaz Sharif took up the matter at a high-level meeting and decided to scrap the loss-making entity while using its land for different purposes.