Government invites bids for majority stake in loss-making PSM

ISLAMABAD: The government on Tuesday invited bids for up to 74 percent stake in loss-making Pakistan Steel Mill Corporation (PSMC), aiming to revive the country's largest non-functional industrial unit.

Built by the Soviet Union in 1970s, the state-owned facility has become a huge drain on government resources and has not produced steel at its 19,000-acre facility since June 2015.

Apart from a multibillion rupees worth of plants, the PSMC also owns 1,229 acres of land.

"Expression of Interest (EoI) has been called for privitisation of mills core operating assets to private sectors," an official said.

The Cabinet Committee on Privatization (CCoP) had already approved a transaction plan and the identified core operating assets of the mills would be transferred to Steel Corp. (Pvt) Ltd, a new wholly-owned subsidiary of PSMC.

The government is offering at least 51 percent or up to 74 percent shares capital of Steel Corporation together with management control through bidding process.

The Privatization Commission ((PC) has appointed two Chinese firms including Pak-China Investment Company and Bank of China International Co. Ltd as joint advisor for the transaction.

The interested parties have been asked to submit their interest by September 30, 2021.

PSMC had booked accumulated losses of over Rs45 billion and Rs96 billion in liabilities in July 2018 to December 2020 period.

The CCoP has recently approved the issuance of Scheme of Arrangement (SOA) by the Privatization

Commission for the revival of the mills and has been filed to the Securities and Exchange Commission of Pakistan (SECP).

Officials said investors from Russia and China had already expressed their interest to run the stalled mill and also rise its capacity to three million tons.

The facility has the capacity to expand to produce 3 million tonnes of cold and hot-rolled steel annually, against last production of 1.1 million tonnes,

The PSM last posted a profit of Rs9.5 billion in financial year of 2007-08 . Since then, its financial health

crumbled and started accumulating huge losses in Pakistan People's Party and Pakistan Muslim League Nawaz tenures.

The government had already approved the restructuring plans for PIA, Pakistan Railways and Power Distribution Companies (DISCOs) and other loss-making SOEs to ease pressure on the country’s finances.