LAHORE, June 2: The chairman, Pakistan Steel (PS), Lt-Gen Abdul Qayyum (retired) said on Thursday that the PS would be privatized by the year-end. He told newsmen at the Lahore Chamber of Commerce and Industry stakeholders would be taken into confidence before completing the privatization process by December 31 this year.

“The decision has been taken after thorough consideration and keeping in view the interests of all employees, dealers and consumers besides country’s economic interests and the international scenario. There is no need of getting panic,” he said. The government would also seek from the strategic buyer undertaking for essential investment in revamping the plant and its expansion.

He said the PS assets, excluding the plant, might be privatized as a separate entity. A foreign financial adviser had been assessing the fiscal position of the PS.

“The profit of the mills is likely to exceed Rs6 billion after payment of all taxes during the 2004-05 fiscal,” he said. Earlier, speaking at a meeting of the LCCI executive committee members the PS chairman said the mills was under debt of Rs19 billion in 1999 besides accumulated losses of over Rs9 billion.

After financial and manpower restructuring, Rs12 billion principal amount of the debt had been retired. “The accumulative losses of Rs9 billion have been wiped off and the mills is now paying income and sales tax. Only in the current financial year, Pakistan Steel will deposit over Rs8 billion in the form of sales and income taxes.

“The PS present production capacity is 1.1 million tons per year. It was decided to expand it to 3 million tons but, because of privatization, the expansion plan has been shelved,” he said.

He said that the projects like the Iran-Pakistan-India gas pipeline, second and third phase of the Gwadar Deep Sea Port, Islamabad airport, flyovers, dams and other infrastructural development projects in Afghanistan offered great opportunities to the steel industry in Pakistan.

“For the Iran-Pakistan-India gas project alone, steel pipes worth $1 billion will be required,” he said. He said the PS had proposed some increase in the tariff protection, which had become inevitable in the wake of influx of steel products from energy-rich countries of the region that could produce steel at much cheaper cost than Pakistan.

A downstream industries park had been established in the vicinity of the PS plant for the entrepreneurs who intend to set up their factories based on product/by-product of Pakistan Steel. He said the Pakistan Steel had been able to attract a large number of applications. “At present, 40 applications are in process for the allocation of 500 acres of PS land.”

The PS price pattern, he said, was founded on international price trends because of its dependence on imported raw material like coal and iron ore. The domestic price structure was determined by the international factors because 75 per cent of the needs were met through imports and ship-breaking industry, he said. The PS wanted to utilize local iron ore to save huge freight charges and import costs. The development of iron ore mines was the responsibility of provincial governments and not the PS, he told an LCCI member.

Earlier, LCCI President Mian Misbahur Rehman in his address of welcome proposed that on the pattern of POL products price, a countrywide flat rate for PS goods should be announced. The PS should also set up godowns in upcountry and ensure availability of its products there as 80 per cent of its products were consumed by the industry in these areas.

Former presidents of the LCCI Anjum Nisar and Iftikhar Malik, senior vice-president Sohail Lashari and vice-president Sheikh Arshad drew the attention of the PS chairman towards some issues facing the steel industry.