Pakistan’s Federal Minister of Privatization and Investment Dr Abdul Hafeez Shaikh and Pakistan Steel Mills Corporation Chairman Gen ((Retired) Abdul Qayyum briefed the National Assembly Standing Committee on Privatization on the PSMC privatization process, financial and manpower restructuring.

In detailed briefing, the committee was informed that buyers have started due diligence in the first week of December after the opening of virtual and physical data room and site visits

Dr Hafeez Shaikh said despite the process of privatization being we are endeavoring to speed up the process. He said the PSMC required fresh investment. 10 % shares of the PSMC had been allocated for the workers, he added. The Privatization Commission has offered to qualified strategic investors interested in acquiring 51-75% equity stake in PSMC Pakistan Steel Mills together with management control, on an “as is, where is” basis. A consortium, led by Citigroup Global Markets Ltd, is advising the PC on the sale.

The members were informed that the PSMC has never achieved the designed capacity, which was commissioned in 1985. It has existing production capacity of 1.1 million tons a year. It does not produce specialty steel and is not a strategic unit, the meeting was informed.

Giving an overview of the financial position, Mr Shaikh and Mr Qayyum informed the committee that heavy tariff protection was provided to the PSMC up to 70 % import duties in the past, which now is 5-10%. The PMSC never declared dividend and its accumulated losses are Rs 9.3 billion up to 1999-2000. For the first time in 2000-2001 the plant turned around and made profit of Rs 600 million. The PSMC achieved the highest operating profit of Rs 6.7 billion in 2004-05 because of financial and manpower restructuring and higher international prices.

Referring to the upcoming requirements for the expansion and enhanced capacity, the members were informed that an investment of $ 1.2 billion was required for the expansion of the unit to achieve a minimum three million tons capacity and another investment of around Rs 12 billion was required for renovation of Coke Oven Batteries and other areas. It was also clarified that only 4457 acres core land of the PSMC, i.e., 23 % of the existing one would be transferred to the successful bidder.