Pakistan Steel Mills ‘shuts down’: who will take over its land?

ISLAMABAD: The federal government has decided to shut down Pakistan Steel Mills (PSM), a state-owned enterprise that has been incurring financial losses for several years.

The Secretary of Industry and Production announced that the Sindh government has been offered 700 acres of the PSM’s 19,000-acre land to establish its own steel plant, with the remaining land intended for industrial use.

The decision to close PSM comes as a result of the mill’s poor performance and financial losses, with an annual salary bill of Rs3.1 billion for its employees and a total of Rs32 billion paid in salaries over the last decade.

Additionally, the Pakistan Steel Mills has consumed Rs7 billion worth of gas over the past decade, which CFO Arif Sheikh attributed to politically-influenced recruitment and permanent staffing.

Reportedly, the Sindh government planned to establish a new steel plant to replace the old one, and the federal government has also decided to allocate 4,000 acres of land from the PSM site to special economic zones.

The Ministry of Industries and Production had previously directed the authorities of Pakistan Steel Mills to discontinue the supply of gas to the steel plant, rendering revival efforts futile.

Pakistan Steel Mills, established in 1974, had estimated losses of Rs22.4 billion as of June 30, 2023, with gas obligations reaching Rs33.5 billion. The assets of Pakistan Steel amount to Rs83 billion, with a loss of Rs6 million per hour faced during the fiscal year 2023-24.