Strengthening Bilateral Ties: Russia’s Strategic Support for Pakistan in 2025
In a landmark announcement, Russian Ambassador to Pakistan, Albert P. Khorev, revealed that Russia and Pakistan are set to deepen their cooperation in the energy and industrial sectors in 2025. This includes a key initiative for the modernization of Pakistan Steel Mills, one of the country’s largest loss-making state-owned enterprises. The cooperation comes at a time when Pakistan is striving to address long-standing economic challenges, including reviving state-owned industries under the supervision of an International Monetary Fund bailout agreement.
Modernizing Pakistan Steel Mills: A Critical Step
Pakistan Steel Mills, which once produced nearly half of the country’s steel requirements, has faced significant decline since 2008 due to a combination of corruption, mismanagement, and lack of investment. Despite being one of the largest steel producers in the region, PSM has not produced steel since June 2015, and as of August 2024, the company has accumulated losses exceeding $800 million.
A technical team from Russia visited PSM last month to assess the feasibility of its modernization, marking the first step in a potential overhaul. The focus is on revitalizing the mill through collaboration with Russian expertise, bringing advanced technology and management systems to the facility. If successful, the modernization could help boost Pakistan’s steel production, reduce dependency on imports, and create jobs in a struggling industrial sector.
Energy Cooperation: A Key Pillar of the Partnership
Energy cooperation between Russia and Pakistan has gained momentum in recent years. Pakistan has increasingly turned to Russia to diversify its energy imports, especially in the wake of rising global fuel prices. In 2023, Pakistan began importing discounted Russian crude oil, which had been banned from European markets due to Russia’s ongoing war with Ukraine. Additionally, the country received its first shipment of liquefied petroleum gas from Russia in the same year.
For Pakistan, the move to secure Russian energy supplies is a strategic one, aimed at reducing the nation’s energy import bill, which makes up a significant portion of its external payments. Pakistan is targeting imports of up to 100,000 barrels per day (bpd) of Russian crude, which could help lower its overall import costs. However, challenges remain, including higher shipping expenses and lower-quality refined products compared to oil from Saudi Arabia and the UAE, Pakistan’s primary suppliers.
Building Transport and Infrastructure Corridors
Russia’s cooperation with Pakistan also extends beyond energy into the transport and infrastructure sectors. The two nations are set to collaborate on major projects such as the Pakistan Stream gas project, also known as the North-South gas pipeline. This ambitious 1,100 km (683 miles) pipeline will deliver liquefied natural gas from Karachi, located on Pakistan’s Arabian Sea coast, to power plants in Punjab, in the northeast of the country. The project is a vital step in addressing Pakistan’s growing energy needs, providing a stable source of imported energy for the nation’s power grid.
Another significant infrastructure project is the Trans-Afghan Multimodal Transport Corridor, which will connect northeastern Kazakhstan, Uzbekistan, Afghanistan, and Pakistan, eventually linking to the port of Jebel Ali in the UAE. This transport corridor aims to facilitate the efficient movement of goods and energy resources across Central Asia and South Asia, providing economic benefits for all the countries involved by enhancing trade and connectivity.
Revitalizing Railway and Maritime Transport
In addition to energy and pipeline projects, Russia has expressed interest in participating in the modernization of Pakistan’s key infrastructure, including the Quetta-Taftan railway line. This vital railway line connects Pakistan to Iran and serves as an essential link for regional trade. Revamping the railway network would improve transport efficiency, reduce costs, and support Pakistan’s growing trade with its neighbors.
Furthermore, Russia aims to increase maritime cargo transportation between the two nations, providing a reliable and cost-effective means of moving goods. This would further boost trade and enhance the logistics network between Russia, Pakistan, and other regional partners, ultimately supporting Pakistan’s economic recovery and growth.
A Promising Partnership for the Future
The growing cooperation between Russia and Pakistan in energy, industry, and infrastructure comes at a time when Pakistan is working to stabilize its economy and strengthen its industrial capabilities. The modernization of Pakistan Steel Mills and the expansion of energy projects like the North-South gas pipeline could play a pivotal role in reducing the country’s reliance on foreign imports and improving domestic production.
By leveraging Russia’s expertise and technology, Pakistan is positioning itself for a more secure and self-sufficient future, with stronger bilateral ties leading to economic growth and job creation. As the two nations continue to build on their relationship, the partnership promises to yield long-term benefits for both countries.
