The federal government has decided to permanently close Pakistan Steel Mills (PSM), a state-owned enterprise that has been losing money for many years. This decision marks the end of an era for the mill, which has struggled financially for over a decade.
The Secretary of Industry and Production announced that the Sindh government has offered 700 acres out of the mill’s total 19,000 acres to build its steel plant. Despite attempts to sell the mill last year, no buyers came forward. The rest of the land will repurposed for industrial use.
Chief Financial Officer (CFO) Arif Sheikh cited poor performance and huge financial losses as the main reasons for shutting down PSM. Established in 1974, the mill has been a financial drain on the government, with employee salaries alone costing Rs3.1 billion annually. Over the past decade, the government has spent Rs32 billion on salaries and another Rs7 billion on gas. Arif Sheikh blamed the mill’s downfall on politically motivated hiring and permanent staffing.
In 2010, the government’s decision to regularize 4,500 employees added another Rs2 billion to the mill’s expenses. Now, with the closure of PSM, the Sindh government plans to establish a new steel plant on the site, while the federal government has allocated 4,000 acres from the PSM site to special economic zones.
Efforts to revive Pakistan Steel Mills faced a major setback when the Ministry of Industries and Production ordered the discontinuation of gas supply to the mill. Since June 2015, gas supply to critical parts of the plant, including blast furnaces, has severely restricted. By June 30, 2023, PSM had incurred losses of Rs22.4 billion and owed Rs33.5 billion for gas. The mill’s total assets valued at Rs83 billion, but in the fiscal year 2023-24, it lost Rs6 million per hour.
Pakistan Steel Mill Established Date
Pakistan Steel Mills, which once could produce 2.2 million tons of steel, was a vision of former Prime Minister Zulfikar Ali Bhutto, who laid its foundation on December 30, 1973. Despite its potential, the mill’s shareholding diluted over the years, including a 12% share in 2009. Now, the storied mill’s operations will cease, marking the end of a significant chapter in Pakistan’s industrial history.
, a state-owned enterprise that has been losing money for many years. This decision marks the end of an era for the mill, which has struggled financially for over a decade.){kind=link}