Pakistan Steel Mills: CDWP likely to approve Russian-backed revival
Plant’s capacity to jump by 0.4m tons after injection of Rs30.5 billion.
ISLAMABAD:
The Central Development Working Party is likely to recommend awarding Rs30 billion contract of Pakistan Steel Mills expansion project to Russian state-owned company in its meeting tomorrow (Friday).
Under the expansion project, the capacity of Steel Mills will be enhanced to 1.5 million tons annually from existing 1.1 million tons. The initial cost of the project has been estimated at Rs30.45 billion, while the actual cost will be determined after technical audit of the plant is carried out by the Russian firm.
Russia has linked its financing for Pakistan Steel Mills expansion project with award of contract to its state-owned firm VO Tyazhpromexport.
After CDWP – a body of Planning Commission – gives a go-ahead, Ministry of Production will then sought the final approval from Executive Committee of National Economic Council (Ecnec).
Sources maintained that after seeking approval from the apex body, Pakistan and Russia will sign Memorandum of Understanding (MoU) under which Russia will finance $350 million for Pakistan Steel Mills expansion project. The MoU is currently being finalised between two countries.
Under the agreement Pakistan will award contract to Russian firm without going into a bidding process, a step that may raise serious questions over transparency in the whole process.
According to documents available with The Express Tribune, the government of Pakistan has already accepted the offer of Russian government to award multi-billion rupees contract to Russian state-owned firm VO Tyazhpromexport.
Ministry of Production just wants the consent of CDWP and Ecnec to finalise the deal, sources added.
President Zardari’s during his visit to Russia on May 11 to 13 held a meeting with the Russian state-owned firm in connection with the expansion of Pakistan Steel through technical assistance and concessionary financing by the Russian Federation.
The augmented profit from the expansion programme would also be helpful in meeting expenses for another expansion up to three million tons per year.
Pakistan Steel Mills low production and low capacity utilisation is resulting in the low sales and mounting losses, says the document. No investment had been made to catch up maintenance and mandatory repairs, which eventually resulted in the deterioration of the machinery and equipment. The surplus manpower, mounting liabilities, poor discipline and lack of accountability culture have added to the already depressed situation, according to documents.
Document further reveals that Pakistan Steel set up with the techno-economic assistance of the then Soviet Union has robust mechanical equipment but weak control system, which has resulted in inefficiencies and inaccuracies.
Keeping in view that the current demand of steel in the country is around 5.5 to 6 million tons per year, the present government has accorded priority to the expansion of Pakistan Steel Mills from its existing capacity of 1.1 million tons per year to 1.5 million tons, documents add.
Published in The Express Tribune, October 20th, 2011.
The Central Development Working Party is likely to recommend awarding Rs30 billion contract of Pakistan Steel Mills expansion project to Russian state-owned company in its meeting tomorrow (Friday).
Under the expansion project, the capacity of Steel Mills will be enhanced to 1.5 million tons annually from existing 1.1 million tons. The initial cost of the project has been estimated at Rs30.45 billion, while the actual cost will be determined after technical audit of the plant is carried out by the Russian firm.
Russia has linked its financing for Pakistan Steel Mills expansion project with award of contract to its state-owned firm VO Tyazhpromexport.
After CDWP – a body of Planning Commission – gives a go-ahead, Ministry of Production will then sought the final approval from Executive Committee of National Economic Council (Ecnec).
Sources maintained that after seeking approval from the apex body, Pakistan and Russia will sign Memorandum of Understanding (MoU) under which Russia will finance $350 million for Pakistan Steel Mills expansion project. The MoU is currently being finalised between two countries.
Under the agreement Pakistan will award contract to Russian firm without going into a bidding process, a step that may raise serious questions over transparency in the whole process.
According to documents available with The Express Tribune, the government of Pakistan has already accepted the offer of Russian government to award multi-billion rupees contract to Russian state-owned firm VO Tyazhpromexport.
Ministry of Production just wants the consent of CDWP and Ecnec to finalise the deal, sources added.
President Zardari’s during his visit to Russia on May 11 to 13 held a meeting with the Russian state-owned firm in connection with the expansion of Pakistan Steel through technical assistance and concessionary financing by the Russian Federation.
The augmented profit from the expansion programme would also be helpful in meeting expenses for another expansion up to three million tons per year.
Pakistan Steel Mills low production and low capacity utilisation is resulting in the low sales and mounting losses, says the document. No investment had been made to catch up maintenance and mandatory repairs, which eventually resulted in the deterioration of the machinery and equipment. The surplus manpower, mounting liabilities, poor discipline and lack of accountability culture have added to the already depressed situation, according to documents.
Document further reveals that Pakistan Steel set up with the techno-economic assistance of the then Soviet Union has robust mechanical equipment but weak control system, which has resulted in inefficiencies and inaccuracies.
Keeping in view that the current demand of steel in the country is around 5.5 to 6 million tons per year, the present government has accorded priority to the expansion of Pakistan Steel Mills from its existing capacity of 1.1 million tons per year to 1.5 million tons, documents add.
Published in The Express Tribune, October 20th, 2011.