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PSM land allocated for industrial park under CPEC

Updated Feb 27, 2017 08:02am


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ISLAMABAD: Pending a strategic decision on its privatisation, Pakistan Steel Mills (PSM) continues to lose its land — this time to an industrial park to be set up under the China-Pakistan Economic Corridor.

A government official told Dawn that Prime Minister Nawaz Sharif had approved allocation of 1,500 acres of PSM land for the industrial park. The prime minister has “desired that it (matter) may be taken up with the Privatisation Commission and Board of Directors of PSM,” said an order issued by the industries and production ministry.

The ministry said the land was originally meant for investment as per PSM book of accounts and could be utilised for development of an industrial park under the CPEC. “In order to finalise the modalities regarding establishment of the industrial park, the matter may please be placed before the (PSM) board,” the order said. The Privatisation Commission was asked to work out to facilitate the earmarked piece of land for setting up the industrial park.

Interestingly, the PSM board has been incomplete and without a chairman since the PML-N came to power in 2013.

Finance Minister Ishaq Dar had given an undertaking to the International Monetary Fund (IMF) on Aug 19, 2013, that the government would appoint a professional board immediately with inductions from the private sector.

But the board was never reconstituted with 12 members and instead it continued to have two members from the industries and production ministry and one each from the Priva­tisation Commission and the finance ministry. The only private sector member on the board is a former executive of the PSM.

Partly because of its incompletion, neither the PSM board nor its parent industries and production ministry has so far proposed privatisation of the country’s largest industrial unit, where the rot set in after 2007, taking it from a profit of Rs10.4 billion on June 30, 2008, to a loss of Rs26bn on June 30, 2009.

Also read: Chinese, Iranian companies interested in leasing Pakistan Steel Mills

Then prime minister Yousuf Raza Gilani had ordered sacking of the PSM chief on the floor of the National Assembly over allegations of corruption. He ordered an investigation by the Federal Investigation Agency (FIA).

Nevertheless, the total losses and liabilities of the unit reached Rs200bn by the time the Pakistan Peoples Party government completed its five-year term in 2013.

The PML-N dissolved the PSM board and promised to restructure and revive the mill for ultimate privatisation.

This never happened, but the total losses and liabilities reached Rs415bn by December last year and are still counting.

The PSM has been continuously losing its land to various institutions, private investors and politically backed encroachers. The Sindh Board of Revenue is reported to have reclaimed about 1,770 acres of land from encroachers during the PPP tenure, but leased out a major part to investors at times at a rate as low as Re1 per square yard a year for 99 years, while some other parts were again encroached upon by land mafia and sold out to individuals.

Another 157 acres of land was recently leased out to the Port Qasim Authority for Rs9.3 million per acre, even though the Privatisation Commission had estimated the rate at Rs30m per acre. This piece of land is to be used for handling imported coal for the Sahiwal power project.

The Shaukat Aziz government failed to privatise the PSM in 2005-06 due to intervention by the Supreme Court. However, Mr Aziz approved allocation of about 930 acres of land for the National Industrial Park on lease, but the PSM could not recover the lease amount.

Another 220-acre plot was given to Al Tuwairqi Steel, which pledged it with the National Bank of Pakistan and subsequently left the scene.

Dissatisfied with the FIA inves­tigation, the SC transferred the case to the National Accountability Bureau in May 2012 with a deadline to complete the probe in three months, but its progress is still unknown.

Parliamentary committees, government stakeholders and investigation agencies have been discussing the PSM mismanagement and corruption during all this period.

Interestingly, the PSM was given a target for revival with Rs18.5bn fresh public money to achieve 70 per cent capacity utilisation in about a year, but was deprived of full gas pressure when capacity utilisation reached 65pc with a gap of a few months in June 2015 and has been on zero production since.

Published in Dawn, February 27th, 2017


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Comments (73) Closed

Make Pakistan great Feb 27, 2017 08:01am

PSM is symptomatic of the general malaise afflicting all government institutions, most of all the government itself. No hope for the country under the present rulers, sadly.

Idrees Feb 27, 2017 08:08am

Pakistan is trying to jump over industrial era towards IT era. But one must know, no place to implement IT if you don't have any industry.

Pune-India Feb 27, 2017 08:08am

Why to China give it to India, our TATA steel make PSM evergreen. A single successful PSM unit can convert whole Lahore into Industrial zone..

ABCD Feb 27, 2017 08:06am

Next PIA and other undertakings should be brought under CPEC.

aR Feb 27, 2017 08:16am

one more egg in the same basket. hope for the best Pakistanis, nothing can do anymore.

Noshin Feb 27, 2017 08:27am

Mian brothers are hitting the last nail in the coffin of PSM

afzaal ansari Feb 27, 2017 08:26am

The earmarking of PSM' land for the development of industrial park under the CPEC with the approval of the PSM's board without its chairman is ironic and obnoxious. This is tricky conspiracy towards the staggering the survival of the PSM.

Emjay Feb 27, 2017 08:29am

Good. PIA should be next. An airline that puts more people than seats on a plane needs to be privatized asap.

my Comments Feb 27, 2017 08:44am

Wonder if we are witnessing dismantling of PSM, bit by bit, one piece at a time, till its all gone? Why there is no effort to revive this national enterprise and make it profitable. While industrial park is a good idea, there are plenty of other land areas that can be allocated for the park, without taking away land from steel mill.

Lals Feb 27, 2017 09:20am

@Emjay Nope. Entire pakistan will be up for sale next if this will continue. Write my word. China is not giving any money for free. China will land you so much money that any profit comes out of CPEC just goes to them and trust me your country is currently sold to china. Situation of Pakistan is such that it has no capability to do anything on their own.

Raza Akhtar Feb 27, 2017 09:28am

Not surprising, guess who else is in the steel business and hates competition

Alba Feb 27, 2017 09:53am

The PMS book of accounts? A good business broker (one who buys and sells businesses for a fee) will tell you a company's goodwill is worth it's last 20 months of net profits in cash. PSM's last 20 months of receipts were losses. Balance zero. That makes it worth only the real estate it is sitting on, and the industrial assets (such as used machinery, raw materials, office equipment, scrap, etc.) that can be liquidated for cash.

S. Saad Ahmed Hashmi Feb 27, 2017 09:57am

This could be the perfect time to help Pakistan steel mills to stand on their feet as CPEC needs loads of steel. But our government is not interested. They have some agenda to follow. Stupid people

ahmad Feb 27, 2017 10:49am

very big loot and plunder is going on in pakistan, and no institution is dare to question them.

citizen Feb 27, 2017 10:57am

Robbing the peter to paul ! PSM wont get single rupee for this daylight robbery....

naji Feb 27, 2017 10:54am

Either privatizes this beautiful heavy industry to some reasonable international level company or scrape it and melt down all steel in local furnaces. The ex-minister responsible for privatization was promoted to governor now, did nothing for this great project's survival.

Asif Feb 27, 2017 10:59am

By killing the mother-of-all industries - the Pakistan Steel Mill - what industrialization or employment generation the Government of Pakistan is visualizing to achieve? The Import Regime? Trading Regime? Trucking Regime?

Shahzeb Abbasi Feb 27, 2017 11:01am

The mavericks rule over us..The ones who own steel mills in Dubai and Saudia Arabia yet can not bring PSM back to life..Truly all those roads and trains are worthless if the industrial base of the country rots..

Make Pakistan great Feb 27, 2017 11:03am

@S. Saad Ahmed Hashmi

Is it democracy when a patently wrong decision is being taken by the elected government and nobody in the parliament can do anything to restrain it?

Naveed Khan Feb 27, 2017 11:08am

PSM could not get stable because Ittifaq steeel is owned by Shahbaz shareef then who want to strengthen his/her competitors and opponents???? in Market very a few strong competitors exist .Just Understand.

D.K.PAMNANI Feb 27, 2017 11:19am


I agree with you. It should have been given to TATAS for setting up Industry for manufacturing of CARS etc. Giving this to CPEC means selling your land for no profit.

essen Feb 27, 2017 11:35am

Public sector undertakings scuttled on purpose. Gas pressure reduced so that the mill does not achieve promised capacity. Public assets sold to private parties for a song. Reminiscent of soviet union after the wall fell in 1989. Welcome to the new breed of plutocrats aka the mafia.

Onlooker Feb 27, 2017 11:36am

From where china procures steel for CPEC works, China itself OR from Pakistan?

Iqbal hadi zaidi Feb 27, 2017 11:49am

Time to realize what we are losing to CPEC than gaining.

Imtiaz Feb 27, 2017 12:05pm

This happens when all you have is a road building policy and nothing else.

SRINI Feb 27, 2017 12:02pm

@S. Saad Ahmed Hashmi Good point. CPEC really needs good amount of steel and also its right time to bring life back to PSM. Is Steel also coming from China ?? meaning Money from China and back to China??

Indian Feb 27, 2017 12:11pm

Good job Pakistan! Keep doing it to yourself. I am happy :)

CPEC Zindabad!!!

jafferkhan Feb 27, 2017 12:23pm

Let CPEC complete once.. More land will come to pakistan.

Pravin Feb 27, 2017 12:31pm

People who praise for CPEC soon will realize that the thing they have lost will never be reset because of their liabilities against China. and it is slowly being clear that what they are loosing.

mangoman Feb 27, 2017 12:42pm

@S. Saad Ahmed Hashmi Brother, question is how is PSM gonna compete with incoming Chinese steel?

naji Feb 27, 2017 12:47pm

India have 13 steel mills, mostly larger capacity than Pakistan steel. Largest Indian steel mills in private sector and all running well. Because Dr. Abdul Kalam ex-President of India, when he died, he had one flat only, No car, No air conditioner, No any plot anywhere, he donated his last 8 years pension to his village development. Dr. kalam had few pairs of clothing, less than half dozen pants, few shirts and 3 suits.

Global Peace Feb 27, 2017 01:02pm

Yes , Good decision since PSM can not do anything to survive at least under CPEC there will be some industry & Pakistani workers can get a job.

Farid Feb 27, 2017 01:07pm

Our Iron brother is with us all the way. We are on track to making Pakistan greatest ever.

SID Feb 27, 2017 01:15pm

@S. Saad Ahmed Hashmi China steel manufacturing is overflowing & most of the countries have hiked duty charge on China steel to save their domestic players. You expect China to buy a loss making outdated plant instead buying cheaper steel from their own manufacturer !!!

SID Feb 27, 2017 01:15pm

Everything is fair in CPEC . If tomorrow Pakistani leader will ask to skip a meal per day for CPEC, Pakistani will do it .

A shah Feb 27, 2017 01:40pm

China foot presses a little harder on our throats.

Feroz Feb 27, 2017 01:38pm

If the land is taken PSM must be provided compensation based on its market price, revenue which can be used to rehabilitate it. Theft cannot be allowed, more so from a sick unit.

Sultan pettai Feb 27, 2017 02:52pm

Excellent . Allocate everything to China. But, get the amount from them. It is more important.

People's will Feb 27, 2017 03:12pm

Slowly and steadily the grab season is on.

naseem ahmad Feb 27, 2017 03:16pm

@Pune-India You should have looked at the state of Tata steel operation in UK, before making the suggestion. Poor workers have to loose their pension rights in order to save their jobs.

naseem ahmad Feb 27, 2017 03:22pm

@Onlooker From China, because it is cheaper and makes business sense. China has been selling steel to Europe, which has made there own industry run in losses, Pakistan Steel Mill is running outdated machinery which makes it's product very expensive.

Abdul Majeed sheikh Feb 27, 2017 03:35pm

The Pakistan Steel employees comes in contracted buses daily, some go away for other jobs marking attendance; others play cards, enjoy Wifi' gossips and oftenly protest against privitization and salaries. ECC aproves after every three months back log of salaries We the poor awam pay for their salaries through increase in taxes. Jeya Bhutto and Jiye Altaf and lomg live Nawaz Sharif; nothing is going to change it has been going for long and will continue.......

Abdul Majeed sheikh Feb 27, 2017 03:35pm

@Pune-India Piyare proud Indian from Pune Pakistan steel is not in Lahore it is in karachi. TATA? sucess can be gauged that Bhilai plant was set up much before POSCO Nippon Steel Baoshan yet is much behind them. kindly spare we Pakistanis from your grudge or love

israr khan Feb 27, 2017 03:42pm

My understanding was CPEC is china Pakistan economic corridor to help china get to warm waters by using Gawader Port but we this development it looks like they will be using Karachi ports as well and that is very sad, we should have stuck to our western route and let balochistan develop once that was developed we could then have more population more skilled workers more training grounds more minning more oil and gas more routes more trade with iran and central asia more and more industried like car industry like steel mills like oil and gas refineries however there is absolutely no direction from Pakistan in CPEC I am very disappointed

sachin Feb 27, 2017 03:54pm

@Pune-India Why would India want to run an old tech Steel mill. Capex will need to be re invested. I have advised many steel companies as a consultant. Your logic does not make market sense.

SID Feb 27, 2017 04:00pm

@naseem ahmad TATA steel at least saved their job despite losing $1 billion per year for 5 years . What PSM did ?

Joydeep Feb 27, 2017 04:40pm

@naji - Thanks for sharing. Watch the Video of our beloved Dr. Kalam on YouTube. I want to add - he collapsed while delivering a lecture in Shillong. What a man , what an inspiration.

Zak From Panama Feb 27, 2017 04:49pm

@naseem ahmad

Very true ...we should not take that as an example for managing steel plants. Pakistan's steel plants were best managed in the world but for politicians.

Bdm Feb 27, 2017 04:51pm

@D.K.PAMNANI Are TATA'S willing for this? That is the main question.

Gautam ( Netherlands) Feb 27, 2017 05:00pm

@Abdul Majeed sheikh

Exactly ..what you say is 100% true. This is correct decision and our very best wishes Sir

Bdm Feb 27, 2017 04:57pm

@naji that's the thing. We still have good men at the helm in this country. Whole India bows to Bharatratna Dr Abdul Kalam for his contributions for this country. Certainly most loved President of India.

CH. K. A. Nye Feb 27, 2017 05:13pm

@Naveed Khan... Ittefaq has been shut down since BB's first government....

Berni Feb 27, 2017 05:15pm

Just make sure PSM receives fair price this time.

CH. K. A. Nye Feb 27, 2017 05:18pm

@jafferkhan... From where is this more land going to come to Pakistan??

CH. K. A. Nye Feb 27, 2017 05:25pm

@Feroz... A noble statement that theft cannot be allowed.... Unfortunately the entire nation has been a victim of thieves and knaves...

vivek Feb 27, 2017 05:55pm

When across the border all the steel mills are doing well,then what happened to PSM,don't give it Chinese on a throw away price. Call international bidding and decide,the Chinese will earn back all their investment by utilising 1500 prime land by developing real estate.

Zak from china Feb 27, 2017 06:05pm

Let CPEC complete first

Pune-India Feb 27, 2017 06:40pm

@Abdul Majeed sheikh: PSM is in Karachi..??...oh are u living in Pakistan or somewhere else ..any way..u re comparing talking about Bhilai steel plant half of the steel is supplied to India from this plant...atleast Indian are able to run their companies not depend on the foreign investment..

M.Saeed Feb 27, 2017 07:02pm

A huge chunk of 7,500 acres of land is attached with the PSM. Its present cost is about 150 times more than the presently estimated privatization price ofthe Mills.

M.Saeed Feb 27, 2017 07:05pm

@ABCD: Why not the whole Sharif clan be made part of the CPEC?

SUDHAKAR USA Feb 27, 2017 07:31pm

@naji : Why do you want to bring Hon. Shri. Kalam Sir into this debate and tarnish his image/name. None of the Pak presidents nor politicians come anywhere close to that great man in any thing.

AllI Feb 27, 2017 07:46pm

Thank you China, much appreciated!

Make Pakistan great Feb 27, 2017 08:31pm

@afzaal ansari

PSM is already taking its last breaths. As indicated in the report, PSM was well poised to achieve 70 % capacity utilization as it had reached 65% production capacity just a few days before 10-6-2015, when SSGC was ''made'' to drastically reduce the gas supply pressure on the pretext of non-payment of its dues by PSM. Here the question arises - and this has probably not been agitated so far at any serious level or forum - as to why the government allowed SSGC to curtail the gas pressure on ground of non- payment when the Business Plan for PSM Revival approved by ECC already provided for payment of SSGC dues in installments. Why SSGC chose to act the way it did at a time when it seemed a real possibility for PSM to achieve the targeted capacity level of 70%? The stance of SSGC as well as government's inaction at this critical juncture are really incomprehensible.

The real culprits who have deliberately engineered the demise of this gigantic project should be exposed.

Make Pakistan great Feb 27, 2017 08:52pm

@my Comments

May be some years from now when PSM would be no more, some patriotic Pakistanis would expose and punish the persons behind the conspiracy to dispossess Pakistan of the capability to produce steel.

It is really sad and pathetic that a country which is a nuclear power, was forced to give up its steel producing ability.

madhan Feb 27, 2017 08:54pm

@naji He is a great man

hassan alam Feb 27, 2017 09:30pm

@Pune-India Pakistan Steel Mills is in Karachi my friend

S. Saad Ahmed Hashmi Feb 27, 2017 11:44pm

Fruits of democracy... During Musharraf time.. it was profit making institution. According to above article, steel mills posted a profit of Rs 10.4 billion on June 30, 2008, to a loss of Rs 26 billion on June 30, 2009 and story continues. There are numbers of contracts given to other Pakistani steel mills.Why cannot govt. help steel mills. Very simple. They don't want to.

ARSHAD,cANADA Feb 28, 2017 06:05am

"An industrial park to be set up under the China-Pakistan Economic Corridor"

Where does it say the land is going to China? an industrial Park means local jobs. Just to remind the readers that during the Dictator Musharaf Govt.time, there was an allocation of Land (1250 Acres) The government had acquired 1,250 acres of land from the Port Qasim Authority for establishing the textile city in 2007. The company was established in 2009 and in 2012 the then prime minister Yousuf Raza Gilani inaugurated the city. This was not on PSM land but for the same purpose, to create jobs. The project was not successful because the federal government at that time was unwilling to provide sovereign guarantee to the Power company. That same land could be used for the Industrial Zone.

The_Truth Feb 28, 2017 05:51pm

@Pune-India but please first solve your own problems in India. Or India has become US or UK with highest GDP? Can't feed your own people and are going to develop other countries.

Sujith Prabu Durairaj Feb 28, 2017 06:04pm

@S. Saad Ahmed Hashmi Poor guy you do not understand, China is doing all this to help its own steel industry and not your steel industry.

hopeful Feb 28, 2017 11:45pm

Hold them accountable.

nikus Mar 01, 2017 12:41am

Those who are commenting against Chinku investment in Pakistan, should know that, it may work as well. China's forex reserve has nosedived from 3.5tnUSD in 2014 to 2.8tnUSD in 2017. If the trend continues, it will be bellow 1tnUSD within 5 years. Making cheap things in China is no more viable option. If they use cheap Pakistani labour, it will be good for Pakistan. Furthermore, India granted MFN status to Pakistan. So, India will not deny access to Pakistani goods to India. If Pakistan able to capture Afghanistan and Iranian markets as well, selling small items, Pakistan will be in better position.

syed & syed Mar 01, 2017 02:02am

All those responsible in destruction of steel Mill given capital punishment. The names of culprits regularly appeared in media. The PPP government turned Batala Engineering into scrap and now is the turn of PSM