Elaborating the proposed
privatization of Pakistan Steel, the Chairman said that all
stakeholders would be taken into confidence before finalizing such a
big decision. The Chairman said that the government would take firm
commitment from any strategic buyer to give undertaking for essential
investments in the revamping of the plant and its subsequent
Pakistan Steel Mills in a proposal moved to the
government has proposed for a tariff protection, which it feels has
become inevitable in the wake of influx of steel products from oil
rich Gulf countries including Iran who can produce steel at highly
competitive price as compared to the cost of steel production in
This was revealed by Lt. Gen. (R) Abdul Qayyum,
Chairman Pakistan Steel Mills (PSM) at a meeting with the business
community at Lahore Chamber of Commerce and Industry where the end
users of the steel products from upcoming engineering centers of
Sialkot, Gujranwala, Faisalabad and Lahore were assembled to share the
problems confronted to the engineering sector specially rocketing
steel prices with the Chairman.
The steel industry produces around 3 million tonnes
of steel products as against the total need of over 4 million tonnes a
year. Though the Pakistan Steel was working on its expansion plans to
enhance production capacity from one million tonnes to 3 million
tonnes, yet the country facing a net shortfall of over 1 million
tonnes offering a lucrative market to the steel producing countries.
Gen. Qayyum, however, observed that in a bid to
promote industrial growth, Pakistan Steel has established a Downstream
Industries Park in the vicinity of the steel complex for the
entrepreneurs intended to setup their units based on product/byproduct
of Pakistan Steel. Pakistan Steel has been able to attract a large
number of potential investors with as many as 40 applications which
are currently under process for allocation of 500 acres of land.
Lt Gen (R) Abdul Qayyum said that the price pattern
of Pakistan steel products was drawn on the basis of international
price trends because of its heavy dependence on imported raw material.
Since 75 percent of the domestic needs are met through imports and
ship breaking industry, domestic price structure is fully dominated by
the international factors. Pakistan Steel has huge fabrication
potential, which can be used by engineering industries in Pakistan.
About Iron Ore, the Chairman said that the development of Iron Ore
mines is the sole responsibility of provincial authorities under the
guidance of the federal government.
Pakistan Steel is anxiously awaiting supply of
indigenous iron ore from our own resources to save huge freight
charges and import costs. Iron ores with lesser iron contents are
counterproductive and result in losses than gains, the Chairman
Regarding financial health of Pakistan Steel, the
Chairman informed that Pakistan Steel was under debt of Rs19 billion
besides accumulated losses of over Rs9 billion in 1999. The situation
is altogether different now as the mill is a going concern, making
profits and contributing significantly to the government revenues.
Speaking on the occasion, Mian Misbah-ur-Rehman,
President Lahore Chamber of Commerce and Industry appreciated the
economic turnaround in the Pakistan Steel reflected in the
record-breaking performance during 2003-04. Inviting attention of the
Chairman Pakistan Steel towards some issues faced by the steel
industry, the LCCI President pointed out that the continued decline in
international price of MS billet from $426 to $340 per tonne is badly
affecting the dealers of Pakistan Steel. Imported billet of better
quality is available in the market at a lending price of around
Rs28,000/- per tonne after paying all taxes as against steel mill
ex-factory price of Rs33,000/- per tonne including sales tax. It is
necessary to provide shelter to the local industry producing two
million tonnes steel billet and Pakistan Steel producing only three
lac tonnes annually. The situation calls for enhanced duty on imported
billet with a view to save the local melting industry.
There is a dire need of a level playing field for
all the stakeholders dealing with the Pakistan Steel, the LCCI chief
observed. More than 80 percent products of the PSM consumed by the
industry operating from upcountry destinations, but they have to pay
ex-Karachi prices which include additional cost of freight. This price
differential gives a price edge to the end users located in Karachi.
Like uniformed prices of petroleum products which
are being sold at a flat rate for the whole country, similar price
mechanism for the steel products as well, Misbah suggested. Pakistan
Steel should ensure availability of products at important consumption
points by setting up of steel depots at Lahore and other vital points.
Lahore office of the Pakistan Steel Mills also
needed to be computerized to display the unsold inventory of the mills
through online facility so that local buyers could place orders as per
availability of inventory without any delay.
The meeting was also addressed by the LCCI
President Mian Misbah-ur-Rehman, Senior Vice President Sohail Lashari,
Vice President Sheikh Mohammad Arshad, former Presidents Iftikhar Ali
Malik & Mian Anjum Nisar.
Elaborating the proposed privatization of Pakistan
Steel, the Chairman said that all stakeholders would be taken into
confidence before finalizing such a big decision. The Chairman said
that the government would take firm commitment from any strategic
buyer to give undertaking for essential investments in the revamping
of the plant and its subsequent expansion.