BR reported that PSM spokesman clarifies that all purchases from the first tranche of bailout package are according to the ECC & CCOR instructions and procurement of two ships of coal does not create any mismatched spending as the production targets need these quantities.
He said that the 1st tranche of bailout package was received on August 16th 2012 and the amount of first tranche of bailout was PKR 3.8 billion which was utilized strictly according to the instructions agreed in the CCOR and ECC meetings. On the other hand due to this late receipt the capacity utilization remained low as PSM had to live with existing iron ore and coal for nearly six months April 30th to October 30th 2012. In case of coal there was a serious shortage in September to October 2012 which has further decreased the Capacity Utilization
LCs for two ships of coal according to the blending requirement were established on August 29th 2012 on release of the 1st tranche on August 16th 2012, keeping in view the possibility of commissioning of Coke Oven Battery No 1 (COB-1) as well as the production targets. Firing of coke oven battery 1 was discussed on June 16th 2012 and a high official committee headed by PEO (Commercial) was assigned the task to work out possible details on commissioning of the said battery ensuring its success. Other option of keeping this battery idle was causing PKR 1 crore per month loss and incalculable possible adverse effects on not yet handed over battery. Non commissioning of this battery will seriously affect operation once CAPU is taken beyond 62%.
As regards procurement of local iron ore from Balochistan, it is the policy of the present management to ensure maximum utilization of indigenous iron ore. It would not be out of place to mention that Pakistan Steel has injected over PKR 9 billion in Balochistan economy by way of procurement of iron ore besides giving employment opportunities to the local population. However in spite of our best efforts, the local iron ore supply remains limited to 20,000 MT per month.
As far as procurement of imported iron ore is concerned, Pakistan Steel has long term valid contracts with Iranian companies but due to various restrictions and prevalent geo-political scenario, the same have not materialized. Various tenders have been floated and they are under processing in various stages of materialization. Moreover, C&F based two tenders are ready to be opened which if successful can add about 100000 MT to 150000 MT iron ore in about 50 days. With successful signing of wheat deal with Iran the possibility of procuring iron ore on barter appears bright.
The spokesman added that production levels are decreasing since 2006 to 207 from 89% to 82% in 2007 to 208 when the present CEO was the chairman with net profits reaching PKR 7 billion. Production chart goes on declining in 2008 to 2009 with 64.3%, further to 40.2% in 2009 to 2010, 36% in 2010 to 2011 ending at 18.6 %in 2011 to 2012.The losses were piling up as in one year till 2011 to 2012 they amounted to PKR 22 billion with only reason of low production due to shortage of raw materials and lack of funds. Now with the second tranche of bailout package available, the situation is likely to improve in spite of raw material issues.
It was due to great efforts by the CEO Officers and dedication of workers that PSM has held together and displayed excellent industrial harmony due to co-operation by CBA. The incumbent new CEO had taken charge at about that time with very little funds primarily generated through sales. The employees were being paid two months salary behind schedule. The endeavour for revival has many challenges but post-time action by the present regime has given it a fighting chance.
A contract for 20000 tons of iron ore fine has since been concluded and it is expected that the ship will reach Pakistan Steel Jetty in the 3rd /4th week of this month. The procurement of raw materials is managed through a transparent process and management will continue to procure the material strictly in accordance with the requirement of the plant keeping in view the overall interest of the corporation.
