A Chinese consortium, comprising Chinese Metallurgical Corporation of China Ltd. (MCC) and Donghua Iron and Steel Group, has shown interest in taking control of Pakistan Steel Mills (PSM) on a Build Operate Transfer (BOT) basis.
The consortium is ready to manage the PSM for 30 years. The PSM Board is also expected to present a proposal before the federal government to hand over the steel mill to the consortium on a BOT basis for the said period.
The Board of Directors of PSM has taken into account several options for the revival of PSM in the past few months. It has reached a viable option which is the transfer of the mill on a BOT or Public-Private Partnership (PPP) basis.
Other options on the table include privatization of the PSM, a grant from the federal government, relying on commercial loans for its revival, and operating it through a public-private partnership.
The two-day meeting of BOD of PSM occurred in Karachi last week discussing the operations and revival plan of PSM. Representatives of the Chinese consortium also gave a presentation to the BOD regarding the prospective investment plan and the revival of PSM.
According to the available sources, PSM’s revival requires around Rs. 90 billion. Therefore, the board deemed a public-private partnership as the best option.
The Chinese Consortium said in its presentation that the expansion and revival of the PSM will be undertaken in two phases. The first phase will complete in 18 months. The first phase targets a 1.5 million ton annual capacity for the mill.
The second phase intends to increase the mills’ capacity up to 3 million tons every year. The duration of the second phase will be 24 months.
The consortium further proposed setting up a project company in Pakistan, which should be completed in June. Notably, the PSM will not current fire its current employees. In fact, it will increase them from 10000 to 20000.