ISLAMABAD: In a bid to revitalize the operations of Pakistan Steel Mills (PSM), the federal government has decided in principle to lease the mill to a state-owned Russian company for a period of five years. The move, which is a government-to-government (G2G) arrangement rather than a privatization, seeks to make the steel mill operational once again and inject new life into its operations.
A Chinese company was also interested to get PSM on lease for 25 years, however, the Pakistan government remained reluctant to accept the offer.
This decision follows a series of efforts by the Pakistani government to find a viable solution for the struggling steel mill. In October 2022, the Economic Coordination Committee (ECC) of the Cabinet approved a grant for the disbursement of projected salaries to PSM employees, highlighting the government’s commitment to supporting the workforce.
Previously, Chinese and Russian companies had expressed interest in investing in PSM and operating it under a public-private partnership model. The government’s decision to lease the steel mill to a Russian company is a significant step towards achieving this objective and marks progress in their efforts to bring in international expertise and investment.
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It is worth noting that the Pakistani government recently leased the New York Roosevelt Hotel for a period of three years, demonstrating their ability to engage in similar G2G arrangements. The government signed an agreement with the New York City Administration, aiming to maximize the hotel’s potential during the lease period.
With the involvement of a Russian company, it is hoped that the necessary capital and expertise will be brought in to revive the steel mill’s operations.
While the details of the lease agreement and the name of the Russian company have not been disclosed, it is expected that the collaboration will result in enhanced efficiency, improved productivity, and a boost to Pakistan’s steel industry. The government’s decision reflects its commitment to finding innovative solutions to address the challenges faced by state-owned enterprises.
As the steel mill gets a new lease of life under this G2G arrangement, Pakistan aims to capitalize on its domestic steel consumption, which currently stands at seven million tons, all of which is imported. This presents an opportunity for the steel mill to play a pivotal role in meeting the country’s steel demands and reducing its dependence on imports.
With the lease agreement in place, the government has taken a step forward in its efforts to revive the Pakistan Steel Mills, safeguard the interests of its employees, and contribute to the growth of the steel industry in the country.
