KARACHI, Jan 1: Pakistan Steel plans to expand its production capacity from 1.1 million tons to 3 million tons in the next 10 to 12 years on entirely self-financing basis, the Industries and Production Minister, Liaquat Jatoi, announced on Wednesday in a press conference.
“We are engaging a consultant in a transparent manner for helping Pakistan Steel in expansion”, he told newsmen in the Committee Room of Pakistan Steel in FTC building.
He disclosed that Pakistan Steel is set to earn a net profit of Rs300 million during the current fiscal year but he has raised it to Rs500 million which has been agreed by the Pakistan Steel management.
Chairman of Pakistan Steel Lt Colonel (Retd) Afzal Khan said that the expansion programme would be taken up in a reverse direction. This, he explained means that Pakistan Steel will diversify its production range. Production of value-added items with high domestic demand will be increased to improve Pakistan Steel’s market share.
Increase in market share should improve Pakistan Steel’s revenue which would be utilized to finance the production expansion of those products which have higher demand, the PS chairman spelt out the strategy.
The expansion, he said would be taken up in phases and would cater to the demand of the downstream industries.
Dr Akram Sheikh, the federal Industries and Production Secretary, explained that Pakistan Steel expansion programme planned earlier had to be dropped as demand of steel products in the domestic market went down in last 10 years from 3.3 million tons a year to 2.9 million tons.
He disclosed that local steel consumption has increased this year indicating an upswing in the economic growth and hence the necessity was felt to improve production of Pakistan Steel.
Liaquat Jatoi said that Pakistan Steel has achieved the highest ever sales of Rs10.126 billion in first half of the current fiscal year and expect to touch Rs20 billion mark by end June.
During the calendar year 2002 Pakistan Steel achieved the highest ever quantity wise sales of 1.113 million tons realizing Rs18.30 billion.
With this performance Liaquat Jatoi said Pakistan Steel has in its kitty on January 1 a cash flow of Rs2.86 billion with lowest ever inventory of steel products of four weeks production capacity.
When his attention was drawn towards an observation of State Bank of Pakistan’s recently released first quarterly report which acknowledged increasing sales of Pakistan Steel but said that it was not from production but drawn from the inventory.
Dr Akram conceded that bulk of the product inventory has now been cleared but than what has been sold has led to increase in steel consumption.
He quoted five months (July to November 2002) figures of production of automobiles (two and four wheelers), steel pipes, fans and other items which have shown an appreciable rise in export. This all indicate that steel consumption has increased and there is an upswing in certain sectors.
Responding to a question, Liaquat Jatoi said that his ministry was carrying out a survey of the closed and partially operating sick industrial units in public and private sector. The purpose is to find out the causes of industrial sickness and the cost involved in revival. If it was found viable to revive sick industrial units the government will offer all relief to generate employment opportunities.
He said that the cabinet in its very first meeting took up the matter of unemployment and investment in the country and took the decision to give 12 paisa relief on electricity unit.
“We are for rationalizing utility tariffs”, the minister responded when asked if government was considering a further lowering of tariff rates.
Dr Akram said that utility tariff was not the single factor for high production cost. Low technology, wastages and other factors also contribute to the high production cost.
He estimated a total loss of Rs600 billion every year to the national economy because of these production losses in agricultural and industrial sectors.