The federal government has decided to close Pakistan Steel Mills (PSM), a state-owned enterprise plagued by long-standing financial losses. According to the Secretary of Industry and Production, the Sindh government has been offered 700 acres of the PSM’s total 19,000-acre land to establish its own steel plant.
Last year, it was determined that there were no buyers for PSM, with the remaining land earmarked for industrial use. Chief Financial Officer (CFO) Arif Sheikh cited poor performance and financial losses as reasons for the shutdown decision. Established in 1974, PSM has faced financial difficulties for the past decade, with annual employee salaries totaling Rs3.1 billion and a total of Rs32 billion paid out over the last ten years.
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Additionally, the mill has consumed Rs7 billion worth of gas in the same period, partly due to politically influenced recruitment and permanent staffing. In 2010, the decision to regularize 4,500 employees resulted in an additional Rs2 billion in costs.
The Sindh government plans to establish a new steel plant on part of the PSM site, while the federal government intends to allocate 4,000 acres for special economic zones. Earlier directives from the Ministry of Industries and Production instructed PSM authorities to halt gas supplies to the steel plant, undermining revival efforts. As of June 30, 2023, PSM reported losses of Rs22.4 billion and gas obligations of Rs33.5 billion, despite its assets totaling Rs83 billion.
