Federal govt decides to close down Pakistan Steel Mills

ISLAMABAD: The federal government has decided to close down Pakistan Steel Mills (PSM), a state-owned enterprise that has been suffering from heavy losses for years, here on Monday.

As per the issued statement, Secretary Industries and Production said that the Sindh government has been offered to take over 700 acres of the total 19,000 acres of PSM land and set up its own steel plant at the site.

Last year, the secretary claimed that he found out that there was no buyer for Pakistan Steel Mills. “Except for 700 acres, the land will be used for industrial purposes”, he added.

Meanwhile, Chief Financial Officer (CFO) Arif Sheikh claimed that the federal government has decided to shut down PSM due to its poor performance and financial losses.

The mill, established in 1974, has been facing financial difficulties for the past decade. The CFO claimed that the annual salary of PSM employees is Rs 3.1 billion and the government has paid Rs 32 billion as salaries in the last 10 years.

Moreover, the mill has consumed gas worth Rs 7 billion in the last decade, Arif said, blaming ‘politically influenced recruitments and permanent staff’ for the state-run institution’s sinking.

In 2010, the CFO added, the government decided to make 4,500 employees permanent, resulting in an additional cost of Rs 2 billion.

The Sindh government has now announced the plan to set up a new steel plant in place of the old one, Secretary Industries and Production said. Moreover, the federal government has also decided to allocate 4 thousand acres of land from the site of Pakistan Steel Mills for special economic zones.

Earlier, it was reported that the Ministry of Industries and Production had directed the authorities of Pakistan Steel Mills to stop the supply of gas to the steel plant, making efforts to revive Pakistan Steel Mills futile.

According to the notification issued by the Ministry of Industries and Production, the Chief Executive Officer of PSM has been directed to stop the supply of gas to Pakistan Steel Plant.

Gas supply to key parts of Pakistan Steel’s plants, including blast furnaces, was strictly restricted from June 2015, with the aim of preventing complete shutdown of critical components such as blast furnaces, the circular said.

Pakistan Steel had estimated losses of Rs 22.4 billion till June 30, 2023, while gas liabilities reached Rs 33.5 billion.

Pakistan Steel’s assets are worth Rs 83 billion, while it faced a loss of Rs 6 million per hour due to ongoing accounts receivable during the financial year 2023-24.

It is noteworthy that Pakistan Steel was founded by former Prime Minister Zulfiqar Ali Bhutto on 30 December 1973.

Pakistan Steel Mills Design, which has a capacity to produce 2.2 million tonnes of steel, was also given a 12% shareholding in 2009.