ISLAMABAD - The government’s plan of reviving sick Pakistan Steel Mills (PSM) before its privatization has started yielding results, as production of loss making public sector entity has increased to 25 percent from 3 percent of May 2014 due to the financial bailout package.

The Economic Coordination Committee (ECC) of the Cabinet on April 25 2014 had approved Rs 18.5 billion bailout package for the revival for the financially troubled Pakistan Steel Mills (PSM) in a bid to restructure the national entity before going for its privatisation. The revival plan was envisaged in achieving 77 percent capacity of the PSM till June 2015 from only five percent of May 2014. However, the PSM has improved its production due to the financial injection during five months of the bailout package.

“As a result of the financial package of Rs 18.5 billion specially approved by the ECC for revival of the Pakistan Steel Mills, its regular production has since been gaining momentum. The production capacity of the country’s prime steel production unit, owing to the economic stimulus has risen to 25pc from a paltry 3pc in May 2014”, CEO, Pakistan Steel Zaheer Ahmed Khan briefed the Federal Minister for Finance, Senator Muhammad Ishaq Dar about the progress of Pak Steel at a review meeting here Saturday.

It is worth mentioning here that government had decided to privatise the 68 public sector entities that also included Pakistan Steel Mills. However, the government would privatise it after improving its condition with financial injection of Rs18.5 billion, as it believed no party would be interested in owning the PSM in its condition. Sources in Privatisation Commission informed that the privatisation of PSM has two parts, as first we will restructure it and will go for its privatisation when its production capacity enhances to 40 per cent, which will be done by the end of ongoing year.

Meanwhile, the press statement issued by Finance Ministry stated that CEO Pakistan Steel Zaheer Ahmed Khan apprised the Minister that the production is expected to touch the 30pc mark by the end of September and should touch 40pc in October. It is expected to escalate to 77pc of the total 1.1 million ton per annum capacity by end December 2014, which would be a break-even point, nullifying the losses occurring to the Mill, Zaheer Khan added. 

The CEO also briefed the Minister about some issues faced by Pak Steel including the imposition of 5pc duty on import of iron ore. The Minister responded that the issue would be considered at ECC meeting and appropriate decision taken in this regard. The CEO also requested for relaxation in the condition of advance payment of GST on each imported shipment of raw material. He said it would be easier for Pak Steel to pay the GST on the finished products. Finance Minister gave instructions to FBR to submit the case for decision regarding allowing three months time to Pak Steel for payment of GST.

Other relevant administrative matters were also discussed during the meeting. The Minister appreciated the surge in the production at Pakistan Steel and asked the CEO Zaheer to keep up the good spirit. He hoped Pak Steel would achieve the goals and targets that have been set for its complete revival.

Secretary Finance, Dr Waqar Masood, Advisor, Finance Division, Rana Assad Amin, Member Customs, FBR, Nisar Muhammad and DG (ERU), Finance attended the meeting.