ACCOUNT PROFILE

PSM creditor K-Electric approves steel mill’s privatisation

Posted on 13 September 2021

Pakistan-based K-Electric has agreed to issue a no-objection certificate (NOC) for the privatisation of debtor Pakistan Steel Mill (PSM) with management control, representing a significant step on the road to the steelmaker’s revival.

Despite electricity dues of PKR 2 billion ($11.89 million) owed by PSM, the electricity company approved the privatisation, Kallanish notes.

PSM is also aiming to get an NOC from Karachi Water and Sewerage Board (KWSB) for its privatisation. The steel mill also owes significant dues to Sui Southern Gas Company (SSGC), which cut gas supply in 2015 due to unpaid bills, thereby forcing PSM to remain idle ever since.

The government aims to revive production at PSM by privatising the firm with management control. The steel company was running on a loss owing to low sales coupled with high imported raw material prices and low capacity utilisation.

Amid privatisation, the government also aims to lay off remaining employees through a “Golden Handshake”, by offering them PKR 1 million ($5,949).

The government has invited expressions of interest from foreign and domestic investors to acquire PSM. PSM has incorporated a wholly-owned private subsidiary, “Steel Corp”, to revive the closed steel unit (see Kallanish passim).

Source : Kallanish