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February 27, 2015

PSM eyes ECC for another

Business

February 27, 2015

KARACHI: Pakistan Steel Mills (PSM), threatened by losses and bloated costs, is hopeful that the Economic Coordination Committee (ECC) in its next meeting will approve a new bailout package of Rs8.2 billion for paying salaries to its employees and overdue repair works, a senior official said on Thursday.
Zaheer Ahmed Khan, CEO of the PSM said the state-run facility needs Rs4.5 billion for salaries and utility bills, and another Rs3.7 billion for major repair work. The PSM has not been paying salaries since November 2014, and needs around Rs500 million for salaries every month.
Earlier, the integrated steel complex had demanded Rs8.5 billion for the repair work alone, but it revised down to Rs3.7 billion after “the government asked it to tell the amount which would be needed for major repairs in the first year,” Khan told a news conference.
The remaining of the total demanded amount of Rs8.5 billion for repair may be released in the subsequent years, he added.
Khan said repair works have been due for the last five-six years, and include change of boilers at the major plants, i.e. blast furnace-I, and 110-megawatt thermal power plant.
“Taking 60-70 megawatts electricity production from the power plant against current production at 25 megawatts is the immediate and one of the biggest challenges in the revival of the mills,” he said.
He said the two blast furnaces have developed technical faults a couple of times in the recent past due to power tripping from the main grid station.
“If we were generating the required (60-70 megawatts) power from our own plant, such faults at the blast furnaces would not have developed, and our production would have been higher than current levels of 25 percent,” he said.
The CEO said he had informed the government in July 2014 that the mills required a major overhaul. He also expressed his full confidence in the manpower, saying many of them had “golden hands with over 30-35 years experiences”,

he said.
Khan said the in-house available expertise has given new life to BF-I, which was lying dead for the last 17-18 months. They fixed it in three months at a nominal cost. “Foreigners have estimated an expenditure of $100,000 to replace it (dead blast furnace) with a new one in three years time,” he said.
Pakistan Steel Mills has already received a sum of Rs18.5 billion since May 2014 under a bailout package. The bailout package was granted to the Pakistan Steel Mills on the assurance from its management that it would bring the production to the level of 77 percent.
Pakistan Steel, facing accumulated losses of Rs260 billion, is one of the first big firms to go under the hammer under government’s privatisation plan, in which the debt-laden country hopes to raise billions of dollars by the end of 2015.
Giving details of the recently availed (from May 2014 to January 2015) bailout package of Rs18.5 billion, Khan said, his team was making all out efforts to achieve the promised breakeven production of 77 percent by April 2015. “We will increase current production of 25 percent to 70 percent next month (March) and to 77 percent in April,” he said.
“Both the blast furnaces and convertors are ready to perform,” he said, adding, the PSM has asked Federal Board of Revenue to place 15 percent regulatory duty on import of Hot Roll Coils to give it a level playing field.

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