Gas crisis poses risk to PSM blast furnaces

Published July 8, 2015
“Gas pressure is being used as a tool to prevent PSM from achieving higher production capacity targets. This situation is helping importers flood Pakistani market with imported steel,” said PSM spokesman Shazim Akhtar. ─ AFP/File
“Gas pressure is being used as a tool to prevent PSM from achieving higher production capacity targets. This situation is helping importers flood Pakistani market with imported steel,” said PSM spokesman Shazim Akhtar. ─ AFP/File

KARACHI: The Pakistan Steel Mills (PSM) is facing a crisis-like situation as its capacity utilisation came down to zero per cent on Tuesday because of reduced gas supply by the Sui Southern Gas Company.

“Gas pressure is being used as a tool to prevent PSM from achieving higher production capacity targets. This situation is helping importers flood Pakistani market with imported steel,” said PSM spokesman Shazim Akhtar.

During March and April when production was at its peak, gas pressure was suddenly dropped bringing the production to a very low level from 65pc. Shazim said the PSM had paid the SSGC bill up to March. Monthly gas bill comes to Rs350-400 million.

He said the management of PSM fails to understand as to why this treatment is being meted when the same situation regarding payment of bills existed during the last six years, but never gas pressure was reduced to such a low level.

Despite meetings independently and in the presence of Zubair Ahmed, Chairman, Privatization Commission, Shahid Khaqan Abbasi, Minister for Petroleum and Natural Resources Miftah Ismail, Minister of State and Chairman BoI / SSGC, by Maj-Gen (Retd), Zaheer Ahmed Khan, CEO of Pakistan Steel, and despite an agreement for payment of current gas bill from next month and restoration of gas pressure immediately on July 6, the same has not been done to-date, the PSM spokesman added.

The low gas pressure has put Pakistan Steel blast furnaces, brick/lime kilns and power plant boilers at a high risk of damage which would cause irreparable loss and put the plant out of operation for years, the spokesman added. The PSM management urged the federal government to intervene and help resolve the issue.

K-Electric with Rs55 billion outstanding is never deprived of gas by the SSGC. Why this treatment to a government entity / asset perhaps because it has no ownership at higher level, he added.

The sales of PSM products that was around Rs1bn to Rs1.25bn per month till Jan-Feb 2015 dipped to naught since March 2015.

The PSM has Rs10bn worth of unsold finished stocks that have been driven out of the market by Chinese steel products which have flooded the local market.

Published in Dawn, July 8th, 2015

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