KARACHI, Sept 20: Pakistan Steel Mills got a lifeline on Friday after receiving the first instalment of Rs1.5bn of the new Rs2.9bn bailout package from the federal government.

Shazim Akhtar, a spokesman for the mills, said the amount would be used for disbursement of two months salaries of the employees and for procurement of raw material.

Around Rs800 million will be spent on paying June and July salaries to 16,200 employees on Monday and the rest of Rs700m will be utilised to procure raw material.

The government, he said, had earlier this month approved Rs2.9bn bailout package for the mills.

The release of Rs1.5bn proved a sigh of relief for employees ahead of Eidul Azha. Shazim claimed that the mills has iron ore (mostly imported) stocks of 49,400 tonnes which would be enough for the next three months keeping in view current production capacity of the mills.

The mills has, however, very negligible quantity of imported coal, but the mills would get 5,000 tonnes of coal from local agents in the next three to four days.

Arrangements are also being made to get 20,000 tonnes of iron ore in the next 10-15 days from local agents.

The mills would get a total 25,000 tonnes of coal at a price of Rs14,500 per tonne.

He said that the mills also had unsold inventory of finished item of around 8,000 tonnes (cold and hot rolled items and steel sheets).

After getting coal, the PS production capacity would hopefully surge to 15pc in October and up to 20pc in November from the current 10.1pc, he further claimed.

He said that the management would also give a briefing about the current progress to the Federal Production and Industries Minister Ghulam Murtaza Jatoi who is arriving on Monday at the mills.

He said the second instalment of Rs1.4 billion would also be used in giving salaries of August and September and for raw material purchase.

About clearance of KESC power bill, the spokesperson said that the management had already cleared all the power bills of KESC by Sept 15. However, SSGC’s bill of Rs16-17 billion is to be cleared.

He said sales by the mills in August stood at Rs1.25bn which would drop to Rs950m in September.

Pakistan Steel Labour Union President Haji Khan Lashari and General Secretary PML-N Labour Wing (Karachi Division) Shahid Babar hailed the government’s decision. They, however, termed the release of Rs1.5bn as a temporary relief, saying this amount is insufficient for the long run.

The government should seriously consider releasing at least Rs30 billion which can ensure salary disbursement for at least six months to employees without any interruption and four months of raw material inventory, they said, adding that this would also improve local sales.

They added that the mills got Rs35bn in the last few years creating multiple problems for smooth running of the mills, besides causing serious issues of production and timely salaries disbursement.

They urged the government to enter some kind of contract with Russia and the UK as the two countries are keen to pull out the mills from hot water.