KARACHI: The steel production posted over 19 per cent growth in the first half of this fiscal year, but Pakistan Steel Mills’ (PSM) output fell to zero under the government led by a steel tycoon.

In its second quarterly report, the State Bank said it expects boost in steel production due to increased focus of the government on infrastructure products.

“However, the prospects for PSM are not encouraging,” the SBP observes in the report, adding that the PSM shows a negative equity, and is unable to repay its existing loans, or secure new working capital lines.

“Its production came to a complete standstill in October 2013. As a result, the share of PSM in total steel production dropped to zero,” said the report.

Under the democratic rule of PPP-led coalition government, Pakistan Steel Mills was robbed of its fortunes it had earned in the first eight years of last decade.

The private sector was allowed to eat up the largest share of PSM while three new steel plants were commissioned in Karachi during 2012: one in second half of FY12, and two in first half of FY13.

The private sector is willing to wipe out the PSM from steel business and the government is planning to sell it out to the private sector.

The SBP report also sheds light on other sectors with some positive development. The import of cars, for instance, reduced to 10,776 units during first half of FY14 compared to 29,153 units in the corresponding period of FY13, the report said.

It said that after its poor performance in FY13, car manufacturing, having more than 60 per cent share in the auto industry, is showing signs of recovery in first half of FY14. This may be explained by a reduction in the age limit of imported reconditioned vehicles from five to three years in December 2012, and the introduction of a new model of passenger car, said the report.

However, the report about Pakistan International Airlines was damaging as the operating loss of the airline increased by 300pc in the first quarter of this fiscal year compared to the same period of last year. Under the new government, PIA suffered huge losses in just three months.

The operating losses of PIA increased to Rs13.6 billion in the first quarter of FY14, compared to Rs 4.4bn in the same period of last year.

The government plans to disinvest 26pc of PIA’s shares by end of this year, which bodes well for the airline’s financial performance, it said.

The report does not support the government’s tall claim about the improvement in the Pakistan Railways as the losses are still huge.

According to the SBP report, Pakistan Railways incurred a loss of Rs13.8bn in the first half of this fiscal year, slightly better than the first half of last year when the loss was Rs15bn.

Although this entity is not included in the list of public-sector enterprises that are to be disinvested by the government, the authorities have hired new board members for PR who are preparing a medium-term restructuring plan.