ISLAMABAD  -  The Economic Coordination Committee (ECC) of the Cabinet has approved the operationalisation plan for the revival of Pakistan Steel Mills (PSM).

Adviser to Prime Minister on Finance, Revenue and Economic Affairs, Dr Abdul Hafeez Shaikh chaired a meeting of the Economic Coordination Committee of the Cabinet (ECC).

The Industries and Production Division gave presentation to Committee on the findings and recommendations of the Expert Group constituted to work out an operationalisation plan for the revival of Pakistan Steel Mills.

The ECC approved the recommendations of the Ministry and directed that the due process be completed for listing of PSM for privatization with a view to implement the revival plan based on private sector inputs and collaboration.

In November last year, the ECC had given the Ministry of Industries and Production two months to submit an operationalisation plan, which ended in January.

The expert group, headed by Khalid Mansoor, CEO of Hub Power Company, in January 2019 had sought three more months before it could give an opinion on whether the mill could be managed or not. The expert group has presented the revival plan on Friday, which was approved by ECC.

According to the some of the recommendations of the Expert Group, the PSM should not be privatised or shutdown as it is a strategic asset of national interest. It has also recommended that revival of PSM is technically possible through a phase wise approach.

In order to make PSM operations profitable and sustainable, the Group has suggested that the current organisation structure has to be rationalized (manpower and non-core departments) and aligned with international best practices.

Regarding revival of PSM report, the Expert Group recommended that the land assets available with PSM could be leveraged to settle outstanding liabilities of Rs 206 billion with land sold for industrial purposes which will increase jobs.

However, a detailed review of the applicable regulations needs to be undertaken by the government of Pakistan. Under the revival plan, production capacity of the PSM would be increased to 3 million tonnes per annum.

Initially, the production capacity of the Mill would increase to 1.1 million tonnes per annum in first two years of the revival plan, which would take out the PSM from losses.

Later, the production would enhance to 3 million tons per annum in later stage of the revival plan. The PSM, under the plan, would run under public-private partnership. The Mill, which remained closed for almost four years, is requiring a heavy investment to make it functional.

The PSM is dysfunctional since June 2015 due to many reasons. The previous PML-N government had given bailout packages to the country’s large industrial complex, which failed to yield results.

The total losses and liabilities of the PSM have gone beyond Rs465 billion. Financial year 2007-08 was the last year when the PSM posted profit of Rs9.5 billion. It ran into losses both in the PML-N and the PPP eras. Since then, its financial health has deteriorated. In June 2015, it was closed.