Posted on 16 Sep 2022
The Pakistani government has received an offer of around $1.5 billion for the purchase of a majority stake in Pakistan Steel Mills (PSM), sources tell local media.
According to the government, four Chinese companies recently visited Pakistan and met with authorities with a view to negotiating a stake purchase. Chinese state-owned company Baosteel has expressed interest in the purchase of shares in PSM, Kallanish notes.
The government has decided to conclude PSM’s privatisation process in the third quarter of the fiscal year ending 30 June 2023. As part of the process, the steel mill’s balance sheet will be cleared and its losses will be transferred to another company.
Out of the total land operated by PSM, the government has already transferred almost 6,000 acres to a new company that is owned by the state-run steel manufacturer.
PSM’s current production capacity is 1 million tonnes/year. Post-privatisation, it has the scope to increase capacity to 2m t/y in the second year, and 3m t/y in the third year.
Pakistan’s Economic Coordination Committee (ECC) has approved the release of funds to clear the debt of PSM with creditor Sui Southern Gas Company (SSGCL). The committee approved funds of PKR 620.85 million ($2.65m) to settle eight months of outstanding gas bills from July 2021 to February 2022 (see Kallanish passim).
According to ECC sources, SSGCL continued to supply 2m standard cubic feet/day of low-flame gas to preserve PSM’s coke oven batteries and refractory kilns after the plant’s closure. The average monthly gas bill amounted to approximately PKR 80m/month.
Despite strong recommendations by the finance ministry, SSGCL has hitherto not issued the no-objection certificate (NOC) required to enable the mill’s privatisation. This has therefore delayed PSM’s revival.
Source:Kallanish
