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Pakistan Steel production cycle comes to a halt

Updated Sep 17, 2013 10:47am


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According to a PSM executive, two major production units of coke oven byproduct plant (COBP) and blast furnace are facing acute raw material shortage and second battery has been shifted to heat cycle due to shortage of coal feedstock.  — File Photo
According to a PSM executive, two major production units of coke oven byproduct plant (COBP) and blast furnace are facing acute raw material shortage and second battery has been shifted to heat cycle due to shortage of coal feedstock. — File Photo

ISLAMABAD: The production cycle at the Pakistan Steel Mills — the country’s largest industrial complex — appears to have come to a halt, mainly because of non-availability of raw material and severe financial crunch.

According to a PSM executive, two major production units of coke oven byproduct plant (COBP) and blast furnace are facing acute raw material shortage and second battery has been shifted to heat cycle due to shortage of coal feedstock.

Non-availability of coke to charge the blast furnace will adversely affect productivity of hot metal required to feed the steel-making unit which caters to the rolling mills to make value-added products. “This is going to further damage the condition of batteries and their production parameters.”

He said the first COBP battery had already been on heating since November 2010 without production, incurring millions of rupees per month.

In the first half of this month, the production of coke oven battery stood at just 5,000 tons against its capacity of 80,000 tons per month. Total coal stock now stands at 800 tons against the minimum requirement of 300,000 tons of ready stock under standard operating procedures.

As a consequence, the production of blast furnace stood at 6,000 tons against its monthly capacity of 100,000 tons, due to coke shortage.

Raw steel production stood at about 4,500 tons against the monthly capacity of 91,000 tons.

There is no production of hot strip mill. The billet mill has been closed for the past four years and the billet caster has been out of order for more than three and a half years.

The cold rolling mill’s production was 1,200 tons against the monthly capacity of about 17,000 tons.

Total sales in the last 15 days amounted to a negligible Rs440 million.

“As of today, we neither have any raw material inventory nor saleable stock. Practically, the PSM stands closed even though its major batteries are kept on heating to avoid a technical closure – a stage when the mills cannot be revived,” the official said.

He said the government during its first 100 days had neither inducted a professional management nor changed the board of directors in a transparent manner to take steps to revive the mills that catered to the country’s steel industry.

Officials said the backbone of steel industry was on the verge of collapse and yet it had not been able to attract attention of the new government under whose rule it had already suffered an additional loss of Rs7 billion.

Over the past five years, the PSM has suffered a total loss of about Rs200bn.

“The PSM reached this state due to unchecked corruption, inefficiency, over-employment and government’s lukewarm attitude towards its revival,” a summary of the industries ministry says. Yet no action has been taken to stop the rot.

Last month, the ministry sought the government’s intervention, suggesting four options regarding revival, liquidation, privatisation and closure.

The ministry believes an upfront injection of Rs28.5bn could revive the mills, while its closure would need Rs57bn to clear its liabilities. The summary was rejected by the cabinet’s Economic Coordination Committee.

On Sept 8, the ECC agreed to sanction Rs2.9bn to pay three-month salary of employees but the amount had not yet reached the PSM, an official said.

As things stand now, the PSM’s equity is negative to the extent of Rs200bn (Rs90bn liabilities and Rs110bn cumulative losses), including over Rs45bn bank loans, gratuity, provident fund and outstanding dues of the Sui Southern Gas Company.


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Comments (15) Closed

YOUSUF HUSSAIN Sep 17, 2013 10:09am

The present Gonernment was never serious with PSM problems nor at present it is serious,there are many factors involved in loss of PSM,corruption is not the only reason, actually the Management of PSM was unable to meet the present situation of steel industry,there are many other steel mills in the country they are making profit because they have better management and present market polycies,where PSM manaagement was not taken the issue of new steel mills in our country,secondly the imported steel was badly affected the PSM production and the market competition,local production was costly where as the imported was available at cheaper rates,this is absulately wrong that the corruption is the reason for closer of PSM,because there are certain peoples they are interested in closer of PSM,if that happen that will be the great loss of this poor nation,I am hope full that better market policy and better management can sovled this problem,if the present government is unable to solve it means they can not solved the other problems ,like energy crises.

sameer Sep 17, 2013 11:40am

Let all the Industries come to halt. No Problem. InshAllah. As long as Pakistani have Nuclear weapons. No need for any other Industries. What necessary is, More and more ammunition. Steel Industries, Film Industries or the Locomotive industries are not going to be used in the Gazwa-e-Hind. Only weapons will be used. And Pakistani have that. Long Live Pakistan (?)

khalid Sep 17, 2013 12:23pm

To run the business capital is the secondary thing. First thing is entrepreneurship so only the developed and professional human resource can turn it side up. Industries never be closed they are the source of employment for poor. Govt should take it seriously and appoint professional management and start it step by step

AR Sep 17, 2013 01:35pm

if this mill had been privatized in 2008, now at the minimum 200 billion could have been saved. This amount could be used to build thousands of schools but now this amount stays in the pockets of few.

Rayan Sep 17, 2013 02:07pm

For God's sake privatize it and save national exchequer billions of rupees....

SUNIL Sep 17, 2013 03:07pm

Privatization is a dangerous business. It may amount to short selling, and billions may be pocketed for peanuts.

dr vimal raina Sep 17, 2013 04:27pm

can a steel mill sell as scrap?

Just Someone Sep 17, 2013 06:40pm

@SUNIL: Short selling of what. PSM is not even listed.

Dawood Sep 17, 2013 08:11pm

The mill has to be sold and the country has to bear the burden. It was run well for a while but the previous government ran it into this morass. Instead of recrimination remove it from government control and let the private sector bring it up. The goverment could make it a public private patnership

Parvez Sep 17, 2013 11:13pm

Delaying the inevitable sell off is just more money, we can't afford, going down the drain.

Ashfaq Sep 17, 2013 11:52pm

Why don't we just privatize this country instead and let someone else better than our government drive all the sectors and make this nation prosper... ??

Nad Sep 18, 2013 01:02am

These politicians have eaten up my country. Gen. Musharraf left steel mill in profit. In TV shows, many politicians and even TV anchors bark that whenever army comes in power, leaves the country with problems. But if u go inside the public... public always found relief in army rules. Why politicians bash against army rule... because they cannot do corruption. If you look at the history whenever army came into power from public point of view, army never put burden on common people.

yussouf m mir Sep 18, 2013 02:27am

this is the right way to deal with sate owned robbers let them fall like ducks they milked their employers dry

mujahid Sep 18, 2013 07:19am

what has MID to say as to how much money is required to keep this Giant running only to pay the salaries of the employees working there.Is there anyone who can inform me or the public as to what is the income of the steel mills & its expenditure probably expenses are more then the income, so its time this mill be handed over to the children of MNS or family to run it as a good gesture by the govt.

Suresh Sep 18, 2013 03:15pm

even if the mills closes.... China can fill the gap... China can sell you steel at lower price