ISLAMABAD, Jan 29: The federal government has convened a high level meeting here on February 1 to discuss and approve the expansion of Pakistan Steel (PS) from 1.1 million tons to 1.5 million tons annually at a cost of Rs12 billion.

Official sources told Dawn here on Saturday that the meeting to be presided over by Deputy Chairman Planning Commission Dr. Akram Sheikh and to be participated by the senior officials of the ministries of industries and production and the PS will discuss and approve the expansion of the mills in the light of various official and unofficial reports over the issue.

However, the sources said a new situation has arisen whether to increase the mills' capacity after it was put on the privatization list of the Privatization Commission about three weeks ago.

"If the mill is to be privatized then why should it be expanded and this is some thing which is un-understandable," a source said adding that the views of the officials of the Privatization Commission were now needed to be sought over the issue.

The sources said that the officials of the steel mills would brief the meeting about the expansion plan in the light of their meetings earlier held with Russian, Chinese, Austrian and Ukraine authorities. All the four countries were now interested in the expansion of the Mills.

Interestingly, the original outlay called for expanding the mills from 1.1 million tons to 2.2 million tons annually against 1.5 million tons and eventually to 3 million tons.

The sources said that the mills officials would brief the Tuesday meeting about the offer of the Russians to provide new credit line for the expansion programme. Earlier, Moscow had offered roughly $100 million credit which was not utilized and was eventually lapsed.

According to the Mills' officials, the process of Balancing, Modernization and Replacement (BMR) in the Pakistan Steel has started to improving its performance.

"The meeting is also likely to ask the officials of the Mills about the allegations of Rs8-10 billion corruption and that whether any responsibility was fixed against those involved in it during the last many years," another source said.

The sources said that now when the Mill was showing good profit as per the claims of its new chairman, then why should it be put up for privatization.

Some officials are interested to know whether the Mills has earned over Rs8 billion profit to undertake its BMR without any external assistance.

However, the sources said that the expansion of the Mills will be carried out in the light of the recommendations made by consultants of the M/S Corus of the United Kingdom.

Chairman of the Mills Lt. Gen (Retd) Abdul Qayyum was on record having said that Mills was now in a position to take up the job of expansion on its own by seeking some loans from the local banks.