Islamabad:
China seemed to be out of the race to get the contract to revive Pakistan Steel Mills (PSM) as Pakistan and Russia signed a protocol on the case on Friday with the aim of restarting and expanding steel production in the country and marking a new chapter in Pak-Russian cooperation.
The protocol to restore and modernize PSM in Karachi was signed by industrial secretary Saif Anjum and Director -General of Industrial Engineering LLC Vadim Velichko at the Pakistani Embassy in Moscow, according to a statement here.
The signing ceremony witnessed by special assistant to Prime Minister Haroon Akhtar Khan, Pakistan’s ambassador to Russian Federation Muhammad Khalid Jamali and others. Khan is currently on a visit to Russia with a mission to seek help in the resuscitation of PSM.
“Revive PSM with Russia’s support reflects our shared history and commitment to a stronger industrial future,” Khan said, according to the statement. It said that PSM was originally built with the assistance of the former Soviet Union in 1971 and had remained a lasting symbol of Pakistan-Russia’s band.
PSM had begun to crumble in 2008. A major reason behind the mill’s failure was thousands of new agreements, global recession as well as other factors. PSM recorded a loss of RS16.9 billion in 2008-09 that jumped to RS118.7 billion in five years.
Successful governments in Pakistan Peoples Party (PPP) and Pakistani Muslim League-Nawaz (PML-N), which had been in power from 2008 to 2018, had failed to effectively run this industrial Behemoth, whose economic evil continued due to the high losses of all time.
Later, Pakistan Tehreek-E-Insaf (PTI) launched an initiative to revive it and triggered a race between China and Russia to get the contract. Originally, the PTI government was tilted against China and had started negotiations with a Chinese company, but the negotiations could not be realized.
The Russians, on the other hand, had claimed that since the project had been built by them with Russian technology; Therefore, they were in the best place to find a solution to the problems with the sick device and make it up and run again.
PSM had a cumulative profit of RS9.54 billion up to the financial year 2007-08 during the term of office of then President Perez Musharraf. Over the next 10 years, its loss continued to quench and reached RS200 billion at the end of its tenure on May 31, 2018.
The liquidity crisis in the country, import of steel products at lower prices and closure of production units due to gas interruptions were among the main disadvantages that PSM is facing. A flood of cheap steel imports from China also created obstacles in the way of smooth function of PSM.
In a meeting of the Economic Coordination Committee (ECC) on March 19, 2016, the Ministry of Industry held the ministry -officials that the Pakistan -China -Free Trade Agreement (FTA) -in force since 2007 -was responsible for PSM’s economic collapse.
During the PML-N government’s term of office, an RS18.5 billion Bailout was approved, and the Ministry of Industry was tasked with increasing PSM’s capacity utilization to 77%-break-even-point-in January 2015 so it could be put up for sale.
