Revival of Pakistan Steel Mills Under Consideration: Russian Experts Assess Restructuring Plans
In a recent development, the Ministry of Industries and Production informed the Parliamentary Standing Committee that a team of technical experts from Russia is actively assessing the revival plans for Pakistan Steel Mills. The team has been in Pakistan for on-site evaluations and has also conducted online meetings to discuss the potential restructuring of the beleaguered steel mill. The final decision regarding the future of PSM is expected to be made by June 30, 2025.
A Long-Awaited Assessment of PSM’s Future
PSM has been a critical asset to Pakistan’s industrial landscape, but inefficiencies and financial mismanagement have caused its operational collapse. The steel mill has remained shut since 2015, contributing to the country’s stagnation in steel production. Despite this, the mill’s debts have surged to Rs345 billion (approximately USD 1.5 billion), raising serious concerns among government officials and industry experts.
Despite these mounting liabilities, the Ministry of Industries and Production and the National Assembly’s Standing Committee on Industries and Production remain optimistic that collaborating with Russia could provide a viable solution. The Russian technical team has been tasked with evaluating the financial feasibility, operational status, and future prospects of PSM. Syed Hafeezuddin, the chairman of the committee, emphasized that efforts are being directed at reviving the steel mill rather than scrapping it.
Russian Involvement: Key to Restructuring Efforts
The partnership with Russia could be pivotal in revitalizing PSM, given Russia’s expertise in the steel industry and its history of providing technical assistance to nations seeking to enhance their steel production capabilities. Russian experts are expected to analyze the structural inefficiencies, financial hurdles, and debt management issues currently plaguing PSM, with the goal of presenting a detailed report by January 30, 2025.
The committee’s request for a comprehensive financial report underscores the severity of PSM’s liabilities and highlights the necessity of a strategic overhaul to make the mill viable again. The Russian evaluation is expected to propose a long-term plan that includes not only technical fixes but also potential financial solutions to handle the overwhelming debt.
Concerns Over Liabilities and Operational Challenges
The Pakistan Steel Mills has long been criticized for its inefficiencies, which have been exacerbated by the political instability and management issues over the years. According to reports, the mill has been hemorrhaging operating costs without producing enough revenue to cover expenses, leading to its closure in 2015.
The committee members expressed grave concern over the escalating liabilities, with PSM’s outstanding debts reaching a staggering Rs345 billion. These debts have created significant barriers to the mill’s revival, and committee members have pointed out that unless substantial changes are made, PSM may never regain its competitive position in the steel industry.
In addition to PSM’s internal issues, there is a growing concern about the mill’s power supply. The committee has urged K-Electric, the power distribution company, to take direct control of the power network and collect payments from the public rather than continuing to rely on PSM for payment collections. Syed Hafeezuddin, chairman of the Standing Committee, sharply criticized K-Electric for its role in hampering Karachi’s industrial growth, stating that the company’s management has been detrimental to the region’s economic development.
Looking Ahead: Potential for Revival
While the path ahead remains uncertain, the ongoing efforts to revive Pakistan Steel Mills have sparked cautious optimism. The Russian team is expected to play a crucial role in determining whether the mill can be successfully restructured or whether its debts will ultimately prove insurmountable.
The final report, scheduled for completion by February 14, 2025, will provide the necessary insights into PSM’s operational viability, debt restructuring options, and whether a revival strategy can succeed in restoring the steel mill to profitability.
As Pakistan’s economy struggles with growing industrial challenges, the revival of Pakistan Steel Mills could represent a critical milestone in the country’s industrial sector recovery. However, overcoming the mill’s debts and operational hurdles remains a significant challenge, and only time will tell if the proposed Russian-backed restructuring plan will ultimately succeed.
