KARACHI: The Sindh government has agreed to the federal government’s proposal to establish an Export Processing Zone (EPZ) on the land of Pakistan Steel Mills (PSM).
The decision was made following directives from the Special Investment Facilitation Council’s Apex Committee.
The Chief Secretary of Sindh has been tasked with obtaining the necessary approval from the Provincial Cabinet to change the grant/lease purpose, paving the way for the Ministry of Industries and Production to commence work on the EPZ.
The move comes after a prolonged attempt to privatize Pakistan Steel Mills, a process that spanned four years and involved extensive collaboration among various entities including the Privatization Commission, Ministry of Industries and Production, and the management and board of Pakistan Steel.
Despite significant investment in terms of resources and effort, the privatization initiative did not yield the intended outcomes, resulting in substantial financial losses and adversely affecting community and national morale.
The Privatization Commission attributed the delay in privatization to challenging economic conditions, among other factors.
These included the condition of the asset at the time of sale, structural problems, a shift in strategy from Public Private Partnership to outright sale, neglect of liability settlement, and issues related to the capacity and capability of the Privatization Commission and its advisors.
Pakistan Steel Mills’ financial woes are compounded by its debts to three major institutional creditors: SSGC, the Government of Pakistan, and the National Bank of Pakistan.
The accumulation of interest on these debts, at high rates, has significantly contributed to the corporation’s annual losses, with interest charges adding approximately Rs. 20 billion each year.
Despite efforts to negotiate settlements and reduce interest burdens since the Mills’ closure in 2015, these financial obligations remain largely unresolved.
As per the latest figures, PSM owes the Government of Pakistan Rs.102 billion in principal and Rs.48 billion in interest.
The National Bank of Pakistan is owed Rs.38 billion in principal and the same amount in interest, while SSGC’s claims include Rs.23 billion in principal and a contested Late Payment Surcharge of Rs.40 billion on the principal amount.
The establishment of the EPZ on PSM land marks a significant development in efforts to repurpose the site and stimulate economic activity, following years of financial challenges and stalled privatization efforts.
