Govt begins road shows for Pakistan Steel’s sell-off

KARACHI: The government began a series of investor road shows for the planned multi-million dollar privatisation of Pakistan Steel Mills (PSM), soliciting initial interest from Chinese firms, government officials said on Monday.
The delegation, comprising senior officials of the Privatization Commission and PSM, left for China to conduct road shows to make sale of the mills possible by January 2016. "The purpose of the road shows is to market the mills and find out a strategic partner," said Shahab Amir at Privatization Commission. The road shows will conclude on the coming Friday.
It’s the second attempt by the government to privaitse overstaffed loss-making asset. A Russian-led consortium won the bidding for PSM in 2006, agreeing to pay $362 million for a 75 percent stake. But later the privatisation was blocked by the Supreme Court.
The delegation included state minister for privatisation Muhammad Zubair and chief executive officer of Pakistan Steel Zaheer Ahmed Khan.
The delegation will meet various industry officials, including one of the world largest steel manufacturer Sinosteel Corporation.
A source said the financial advisor to PSM calculated its value at Rs152 billion and liabilities at Rs135 billion
PSM spokesperson Shazim Akhtar said such a delegation will also conduct road shows in other countries as well.
Akhtar, however, did not name those countries. "The delegation visiting China will first return to Pakistan and then leave for other countries later on," he said.
Last month, some Chinese steel firms conducted valuation exercise of PSM.
The firms included Sinosteel Corporation, China Machine, Sinomach, and SDM Shandong.
Pakistan may sell the mills to Chinese investors under the $46 billion China-Pakistan Economic Corridor project.
Sources said Chinese firms were considering investing up to $2 billion in the Russian-made PSM.
Pakistan is a big market for Chinese steel, as envisaged by increased imports from there in recent months and the likely acquisition would save Chinese firms the transportation cost. Pakistan is a market of around eight million tons steel per annum, while installed capacity of Pakistan Steel is 1.1 million tons.
However, the mills has given zero production in the last 100 days due to halt in supply of gas and several other issues, said an industry source.
The PSM mostly produces hot-rolled coils. Other finished products include cold-rolled coils, billets, and pig iron. In total, it produces around 12 products.
The International Monetary Fund, under the ongoing bailout package of $6.2 billion to support the country’s economy, has asked the government to privatise the loss-making state enterprises.
The Fund hopes privatisation will plug holes in the public purse and make such enterprises more efficient.