Russia announces $500m grant for Pakistan Steel Mills

[Devil Soul]

Russia announces $500m grant for Pakistan Steel Mills
Published: November 9, 2011
Russia has announced a grant of $500 million for the restoration of Pakistan Steel Mills, which it had helped establish in Karachi 30 years back.
Federal Secretary for Industries and Production Javed Awan told Express News that the announcement was made when Prime Minister Yousaf Raza Gilani met his Russian counterpart Vladimir Putin on the sidelines of the 10th Heads of Government meeting of the SCO.
(Read: Pakistan, Russia to go for FTA, currency swap agreement)
The money will be spent on the expansion and repair of machinery at Pakistam Steel Mills.
Production capacity of PSM is expected to increase from 1.1 million tons to 1.5 million tons per annum.
Earlier, Putin had offered Russia’s assistance for the enhancement of the production capacity of the Pakistan Steel Mills by increasing its production from the current one million tonnes to three million tonnes.
He also offered coal gasification technology for the Thar coal and upgradation of the Guddu and Muzaffargarh power plants to increase power generation capacity to help meet country’s growing energy needs.
Russia announces $500m grant for Pakistan Steel Mills – The Express Tribune

 

[Al Bhatti]

Politicians cum beggars are our leaders and ministers and in-charge of our national assets, how pathetic.

And we say we are a developing nation, but what is going on is going backwards by leaps and bounds day by day.

I really wish that all countries around the world stops giving all sort of aid to Pakistan until we have capable, honest and sincere and educated new faces running Pakistan and it's national assets.

Only then will these beggars leave Pakistan and go to where they earn money from, the countries where they have business and see with their eyes how those countries are developing daily on a fast pace, countries which are very young compared to Pakistan.

Thanks to our Politicians cum beggars, shame on a country which cannot run it's national airline and railways and national assets effectively.

Even spitting on the faces of these corrupt politicians and leaders and people in-charge of national assets is a waste of spit.

 

[Secret Service]

steel mill is just saved , otherwise it will closed or privatize in few months.

 

[Tangent]

It's the job of the company professionals to run a big plant, like a steel mill.
GoP should either sale this or become a minority partner in this.

 

[regular]

Thank you Russia for lending us great help in time of need....I hope we will go a long way in future for generations.....Insha-Allah....

---------- Post added at 10:44 PM ---------- Previous post was at 10:42 PM ----------

It's the job of the company professionals to run a big plant, like a steel mill.
GoP should either sale this or become a minority partner in this.

I guess I shold buy this steel mills and run it by myself if GOP don't have the ability....:

 

[A.Muqeet khan]

han bacha jag ja chal miun dho key a nashta lag gia hai

 

[Indian Army]

Good start for Pak-Russia friendship....... It must go on,,,,,, No one should loose any chance that can bring your economy on a rise an finally it would be in the interest of people of Pak and Russia,,,,, I think new era belongs to Asia not the west....

 

[Meengla]

Good start for Pak-Russia friendship....... It must go on,,,,,, No one should loose any chance that can bring your economy on a rise an finally it would be in the interest of people of Pak and Russia,,,,, I think new era belongs to Asia not the west....

Exactly.
Nay-sayers are just nay-sayers. If Pakistan had not taken the grants/aid or whatever its 60+ history then--given the caliber of leadership for decades--Pakistan would have resembled Afghanistan in infrastructure, services, and defence capability. Sure, Pakistan probably offered something in return: Pakistan's role was pivotal for decades for American interests in the region against the Soviets but that's how the world works. Quid pro quo. I am sure Russia too is getting something in return--they are not known to throw away money.

I just wish Russia and China use their respective influences over India and Pakistan to bring them to at least a detente. I had once proposed a multinational force with large Russia-China join deployment in Kashmir to defuse the situation to point of real confidence building steps. I still think that is one way forward.

 

[deckingraj]

I just wish Russia and China use their respective influences over India and Pakistan to bring them to at least a detente. I had once proposed a multinational force with large Russia-China join deployment in Kashmir to defuse the situation to point of real confidence building steps. I still think that is one way forward.

The problem is that the solution you are proposing is acceptable to Pak but not to India....If you are not going to be concerned over my feelings i cannot reciprocate....Do you think China will accept a multinational force on her border to resolve disputes with India or other nations??? These are very sensitive and delicate matters and should be dealt with utmost care...the efforts that are going now are going great and should continue in the same fashion...Once our economies are interlocked things will fall in right place...

 

[Meengla]

The problem is that the solution you are proposing is acceptable to Pak but not to India....If you are not going to be concerned over my feelings i cannot reciprocate....Do you think China will accept a multinational force on her border to resolve disputes with India or other nations??? These are very sensitive and delicate matters and should be dealt with utmost care...the efforts that are going now are going great and should continue in the same fashion...Once our economies are interlocked things will fall in right place...

We are kind of going off-topic but I think it is still relevant.
I too have my doubts that China would not want an India-Pakistan peace. Pakistan is a very cheap investment for China to contain, even bleed India. May be I am wrong. May be I am right. But someone--perhaps Russians--need to push China toward bringing India-Pakistan to some genuine peace in Kashmir. Indians trust Russia and Pakistanis trust China. So we have some room for optimism.

 

[somebozo]

We are kind of going off-topic but I think it is still relevant.
I too have my doubts that China would not want an India-Pakistan peace. Pakistan is a very cheap investment for China to contain, even bleed India. May be I am wrong. May be I am right. But someone--perhaps Russians--need to push China toward bringing India-Pakistan to some genuine peace in Kashmir. Indians trust Russia and Pakistanis trust China. So we have some room for optimism.

China doesnt really care about what happens between India and Pakistan. Infact better India-Pak relations are in Chinese favour as well as it will increase transit trade from China to India and will also pave the way for China to further strengthen its ally by transferring more tech and military goods!

 

[nalandapride]

Its nice Pakistan Steel Mills is recovering from its crisis. Steel sector is necessary to build infrastructure from needle to big ship and bridges.

 

[Pakistanisage]

Pakistan Steel Mills was the biggest blunder Pakistan got involved in. The whole thing was based on kickbacks. Instead of buying this nineteenth century recyled mill that Russia duped us into buying, we should have gone for the state of art Steel Mill Japan had proposed to us and was willing to Finance. Had we bought that mill from Japan, it would have paid for itself a hundred times over and pakistan today would have been producing 10+ millon tons of high quality steel which could have brought huge foreign exchange and put Pakistan at par with South Korea in steel production. Our Corrupt leaders have sold our National Interest for few pennies they put in their pockets.

 

[patna_ke_presley]

If Russian are providing $500 million then why is this happening to Pakistan steel mills.
Steel Mills faces shutdown | Newspaper | DAWN.COM

ISLAMABAD: With ‘shutdown plan’ of Pakistan Steel Mills also an option, the availability of its raw material on a precarious 20 per cent capacity utilisation has come down to only 15 days as the company struggles to keep the plant running and pay staff salaries.

“Under the prevailing situation it is not possible to run the affairs of PSM in the absence of any prompt financial assistance for procurement of raw material,” said an SOS call to the federal government by the executive committee of the PSM management, which is looking after its day-to-day affairs.

Seeking an urgent injection of Rs6 billion to procure raw material (coal and iron ore) on an emergent basis, the committee wrote to the government that “if required action for procurement of raw material is not initiated immediately, PSM may fall down to crunches and its revival thereafter will be difficult, even impossible.”

Officials said the company’s liabilities had increased to Rs61 billion and the salaries for October had not been paid to the staff as of Nov 23, except for a Rs10,000 per head Eid allowance.

The PSM has been under severe financial strain since last year.

Although the cabinet committee on restructuring (CCOR) had reconstituted its board of directors in January this year to turn around the country’s largest industrial unit, its operational and financial position has gone from bad to worse in the absence of a full-time chief executive.

The CCOR is expected to meet again on Friday to consider a business revival plan and provide some financial lease of life to the company.

Under the business revival plan, the government has been offered three options. In the first case, the government has to inject/arrange fresh financing of Rs20 billion, which would enable the corporation to turn its operations around.

“The other option could be for the government to continue offering an ad hoc assistance to the PSM of around Rs5 billion per annum, which would ultimately result in bankruptcy.”

According to the PSM management’s executive committee, “the third and final option is closure of the operations which will cost over Rs40.25 billion as immediate closure cost, besides its political implications, including making over 16,000 people unemployed.”

Under the revival plan, the government will provide fresh financing of Rs20 billion from 2012 to 2019 on commercial terms and pick up mark-up for the first three years amounting to Rs9.3 billion.

This will enable the PSM to finance its working capital and enhance its capacity utilisation while simultaneously discharging some of its past liabilities and financing capacity expansion to 1.5 million tons per annum. In this case, the government will receive Rs90.80 billion as sales tax on the sale of finished goods and Rs3.98 billion as income tax (turnover tax) over five years.

As things stand now, the PSM is failing to meet a minimum of 20 per cent capacity utilisation, below which the plant could stop operations and revival becomes technically impossible.

Since prices of coal and iron ore have fallen considerably, it is high time to procure raw material from the international market as in later part of the year procurement from Australia and Canada will be impossible due to severe weather conditions.

The PSM has been apprising the government of an inconsistent supply of raw materials in view of financial constraints.

“It is regretted that no fruitful results have been achieved, which has forced the management to operate the plant at low capacity utilisation, which has increased the financial losses of PSM. Salaries of the employees are not being paid timely and are being paid by stopping the payments of various bills of contractors, suppliers, medical practitioners, clinics and utility bills”.

“The PSM has a threat that employees may be deprived of the salaries and other benefits and also in payment of utility bills.

They may thus come out on streets and resort to agitation. This situation may cause embarrassment for the PSM management as well as for the government,” the PSM management concluded.

 

[Omar1984]

Pakistan Steel gets whopping Rs 11bn bailout package

* Russia offers to help increase PS capacity from 1.1 MMT to 3 MMT per year

* PS current capacity could only cover 20 percent need of the country

Staff Report

KARACHI: The government approved an amount of Rs 6 billion against the proposed business plan submitted by Pakistan Steel (PS) present management for procurement of raw material.

Official sources said that a bail out package of Rs 5 billion is also in the pipe line for Pakistan Steel, totalling the amount to Rs 11 billion to help the state-own company to solve the major problem of raw materials availability and enhance the production capacity utilization of the plant.

PS is an important national strategic asset and mother of the engineering industries of the country, despite the fact that currently PSM is running in low capacity production due to non-availability of raw materials and because of liquidity crunch.

PS faces a net loss in 2008-09 of about 26,526 million rupees, which resulted into continuous erosion of its liquidity to buy raw materials which was further complicated due to the global recession, the unstable and unpredictable volatile prices of raw materials, high freight rates, devaluation of rupee against US, unjustified SROs.

The company cannot be graded as a sinking ship rather it is being operated in a much planned manner in order to overcome the challenges of financial crunch.

Pakistan Steel has contributed about Rs 100 billion towards government exchequer as taxes and duties and one billion rupees as dividend whereas its construction and erection cost was only Rs 25 billion.

The figures show the potential of its technology, equipment and human resource are capable to generate good results.

Pakistan Steel is a national asset having 10600 workers and about 5400 regular officers, on its payroll where as millions of people in engineering industries of the country are indirectly benefiting through PSM. Thereby the PSM has contributed a lot towards economy of Pakistan.

Official sources said that the government is entirely concerned in the expansion plan of PS, as Russia has shown interest in the expansion plan of Pakistan Steel to increase its capacity from 1.1 MMT to 3 MMT per year.

Bilateral talks in this regard are in progress, he said. The rumours of privatisation are just agenda of those selfish and unpatriotic businessmen, who do not want the sharing of this national asset in the steel business.

Pakistan Steel current 1.1 MMT capacity could only cover the 20 percent need of the country but due to quality finished products as compared to imported material, Pakistan Steel products controls the prices of steel products in the country, which is disturbing those 80 percent share holders monopoly in the market for raising the prices, so these type of rumours like white elephant, privatisation, burden on economy are a planned venture of this mafia.



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