ISLAMABAD, Dec 31: Russia has asked Pakistan to early consider Moscow's budgetary proposals for expanding Pakistan Steel from 1.1 million tons to 1.5 million tons.

Informed sources told Dawn here on Friday that in the light of these budgetary proposals Russia has expressed its willingness to offer $160-200 million new credit facility to expand the mills.

Russia has also informed the Pakistani authorities that increased credit could also be considered if Pakistan Steel was willing to further expand the mills from 1.5 million tons to 3 million tons at a later stage.

The original Russian credit amounting to $95 million, extended in 1986-87, has lapsed as it was not availed by the government due to its indecisiveness about the expansion of the mills.

However, Mr N. Ulianov, the President of Russian state enterprise - VO TYAZHPROMEXPORT - wrote a letter to the chairman Pakistan Steel Lt-Gen. (Retd) Abdul Qayyum on December 4, 2004, in which he said that his company has submitted the "Basic Design Solutions" on the plant expansion up to 1.5 mtph in April 2004 along with the make-up of equipment and budgetary cost.

According to the letter, the copy of which was also made available to this correspondent, the president of the Russian state enterprise said that Moscow was ready to consider the issue of increased credit and that now it was awaiting the "appropriate request to the Russian government".

"I would like to take this opportunity once again to assure you of intent and wish of VO Tyazhpromexport to participate in PAKSTEEL expansion programme and implement it successfully", the president of the Russian state enterprise said in his letter.

In another letter to Minister for Industries & Production Jehangir Tareen on December 2, 2004, Russian Minister for Trade and Economic Development, Mr G. Gref said that one of the most important areas of cooperation of our two countries is the expansion and modernization of steel plant at Karachi city, which was formalized on February 6 in the MoU about the economic and technical cooperation for stabilization, reconstruction, repair and enhancement of production capacity up to 1.5 million tons per year.

The implementation of this project, the Russian minister said, could facilitate solution of a number of economic and social issues of strategic nature being faced by Pakistan.

It would also be a symbol of good partnership in the sphere of industry and high technology laying foundation for accomplishment of new mutual plans in industry, power, communications and oil.

"In due cognizance of the fact the expansion of steel mills is not possible without repair and modernization, and also the fact these are the foremost tasks, the state organization V0 TYAZHPROMEXPORT undertook a number of measures which made it possible to formalize and in the shortest possible period implement contract regarding "Basic Design Solutions" for expansion of this plant.

In this manner the state organization was ready to commence the above mentioned jobs in September 2003 i.e. more than a year ago". The Russian minister called for early completion of discussions with a view to starting implementation on the Pakistan Steel expansion programme.

However, sources said that management of the steel mills has not decided whether it should go for the expansion through the Russians who originally established the plant in Karachi.

The chairman of the mills has recently visited Austria and Ukraine and reportedly discussed the expansion plan there keeping in view various proposals given by these two countries.