Pakistan Steel Mills, once a national industrial pride, faces an uncertain future with no potential buyers. The Senate Committee suggests delisting it from privatization options. The mill remains a financial burden, as it owes a large sum to the government and incurs annual expenditures it can't cover, reports Profit Pakistan.
Pakistan Steel Mills (PSM), a former industrial giant, is in dire straits. Despite its past prominence, the Senate Standing Committee on Industries and Production revealed that there have been no takers for this mill, once considered a crown jewel of Pakistan's industrial sector.
The Privatisation Commission secretary has suggested that PSM be removed from the list of state-owned enterprises set for privatization. The mill has been inoperative since 2015 but continues to be a significant financial drain. It owes a staggering $763 million to the government and incurs an additional interest of $125 million every year. Meanwhile, the annual expense on salaries and pensions is around $17 million, a sum the plant can't generate.
PSM's financial difficulties have mounted over the years. The Chief Financial Officer (CFO) has disclosed that the mill's accumulated losses have escalated to $1.43 billion. To make matters worse, theft has been rampant despite the deployment of 500 security personnel. In just the past year, $89,000 worth of scrap was stolen from the premises.
There are tentative plans to develop an Export Promotion Zone (EPZ) at the site of PSM, a process expected to take around six months. However, revitalizing the plant would require a hefty investment. An annual sum of $580 million is needed just to maintain its existing 1.1 million metric tons capacity, and $1.4 billion would be required to increase the production to 3 million metric tons.
Amid these complexities, Senator Fida Muhammad walked out of a recent committee meeting, expressing concerns about the lack of clarity and accountability in the efforts to privatize PSM. His actions underline a broader issue of governance and transparency in dealing with state-owned assets.
The challenges facing PSM come at a delicate moment for Pakistan, which is working to implement a $3 billion bailout package from the International Monetary Fund (IMF). State-owned enterprises like PSM, which are hemorrhaging money, are at the crux of this financial turmoil. According to 2020 data, the collective losses for these enterprises stood at $1.74 billion.
The Senate Committee's revelations indicate that the annual cost to maintain this shut-down facility is enormous, reaching $208 million. Theft remains a prevalent issue, with even copper worth $32,700 recently disappearing from the mill. Despite these alarming incidents, there appears to be a lack of accountability among the security personnel, raising questions about their effectiveness.
The future of Pakistan Steel Mills is shrouded in uncertainty. As the government grapples with significant financial woes and seeks to meet IMF conditions, PSM stands as a glaring example of the challenges faced by state-owned enterprises in Pakistan. Its case serves as a cautionary tale for the country as it navigates a complex economic environment.