As part of revitalisation of the loss-making state-owned enterprises, the Cabinet Committee on Restructuring (CCoR) on Thursday announced Rs6 billion bailout package for Pakistan Steel Mills (PSM) to help it reach breakeven level within next 18 months.

At the same time, the capacity utilisation of PSM will also go up to 60 per cent by end June 2013 from the current level of 20 per cent.

The Cabinet Committee on Restructuring headed by Finance Minister Dr Hafeez Shaikh has decided that monthly plan for capacity enhancement of PSM will be implemented effectively.

As per the decision, it was decided that Rs5 billion will be released through banking institutions as part of the earlier bailout package to PSM. The release of this amount was conditional with the appointment of the chief executive officer (CEO) of the PSM.

Former chairman PSM, Maj Gen (retd) Muhammad Javed was appointed as new CEO on April 25. Earlier, Mr Javed had served as CEO of PSM from September 2006 to May 2008.

An official statement issued after the meeting said that the finance division would also facilitate payments to Sui Southern Gas Company Limited (SSGC) of Rs1 billion within a year. It was also decided that additional requirements of funds for revival of PSM shall be met.

The release of the Rs6 billion is part of the overall package of Rs26 billion, which in principle has been approved for the revitalisation of the PSM in April.

Of these, Rs16 billion is a fresh injection in the PSM, while the remaining were mostly related to adjustments.

The PSM CEO gave presentation to the committee entailing overall state of the mills, revitalisation options, projected cash flow and financial needs.

The CCoR was apprised about the potential collaboration with Russia for expansion of PSM’s capacity. The Russian firm that constructed PSM has already shown its interest to provide the latest technology last year.

With the induction of new machinery and modern technology, the production of PSM can be increased to 0.4 million tons annually, which will help in saving workers from getting unemployed as well.

The committee reiterated the resolve to transform the PSM into a profitable entity. A comprehensive bailout package for revitalisation of PSM was decided by CCoR, added the announcement.

This was the follow-up meeting of the one held on April 11 which asked the PSM for fulfilment of certain conditions before seeking any financial bailout package.

The other reforms includes that the board of directors of PSM has also been reconstituted. It was also ensured to make available raw materials to PSM.

The meeting was attended by Minister for Production, Deputy Chairman Planning Commission, Secretary, Finance Division, Secretary M/O Production, and other officials.