The federal government has resolved to shut down Pakistan Steel Mills (PSM), a state-owned enterprise that has sustained significant losses for years.
The Secretary of Industry and Production stated that the federal government has allocated 700 acres of the 19,000-acre Pakistan Steel Mills (PSM) land to the Sindh government to develop its steel plant.
Arif Sheikh, the Chief Financial Officer, explained that the decision to close PSM was due to its consistent underperformance and mounting financial losses. Established in 1974, the mill has faced significant financial challenges, particularly in the past decade. Sheikh detailed that the government has incurred a total salary expense of Rs32 billion over the last ten years at PSM, with an annual cost of Rs3.1 billion. Additionally, he noted that PSM’s gas consumption during this period amounted to Rs 7 billion. He attributed these financial burdens to recruitment and staffing decisions influenced by political considerations.
Arif Sheikh mentioned that the 2010 decision to regularize 4,500 employees led to an additional cost of Rs 2 billion. The federal government plans to convert 4,000 acres of the Pakistan Steel Mills (PSM) site into special economic zones, while the Sindh government intends to establish a new steel plant there.
The Ministry of Industries and Production previously halted the gas supply to PSM, affecting potential revival efforts. As of June 30, 2023, PSM reported losses of Rs 22.4 billion and outstanding gas liabilities of Rs 33.5 billion. Despite assets valued at Rs 83 billion, the mill incurred hourly losses of Rs 6 million in fiscal year 2023-24 due to persistent financial issues.
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Former Prime Minister Zulfikar Ali Bhutto laid the foundation of Pakistan Steel on December 30, 1973. At its peak, the facility could produce 2.2 million tons of steel annually. 2009, the company was granted a 12% shareholding.
