Pakistan Steel Mills
Encyclopedia
The Pakistan Steel Mills, PSM, is the state-owned
producer of long rolled steel
and heavy iron products in Karachi
, Sindh Province of Pakistan
. The Pakistan Steel Mill is the country's largest industrial undertaking having a production capacity of 1.1 million tonnes of steel. The enormous dimensions of the project can be visualised from the construction inputs which involved the use of 1.29 million cubic meters of concrete, 5.70 million cubic meters of earth work (second to Tarbela Dam), 330,000 tonnes of machinery, steel structures and electrical equipment.
Its unloading and conveyor system at Port Qasim
is the third largest in the world and its industrial water reservoir with a capacity of 110 million impgals (500,069.9 m³) per day is the largest in Asia. A 2.5 km-long sea water channel connects the sea water circulation system to the plant site with a consumption of 216 million impgals (981,955.4 m³) of sea water per day.
However only 18 percent of this capacity is actually in use and the chairman of the mills has requested Rs12 billion to prevent closure of the mills.
In 1968, the Government of Pakistan
decided that the Karachi Steel Project should be sponsored in the public sector, for which a separate Corporation, under the Companies Act, be formed. In pursuance of this decision, Pakistan Steel Mills Corporation Limited was incorporated as a private limited company to establish and run steel mills at Karachi. Pakistan Steel Mills Corporation concluded an agreement with V/o Tyaz Promexport of the USSR in January, 1969 for the preparation of a feasibility report for the establishment of a coastal-based integrated steel mill at Karachi.
(Newsweek, November 4, 1991), whereas the Pak Steel Mill commissioned in 1985 produced about 0.75 million tonnes steel in 1991 with 28,000 employees including 4,000 temporary.
Zulfikar Ali Bhutto
. The mammoth construction and erection work of an integrated steel mill, never experienced before in the country, was carried out by a consortium of Pakistani construction companies under the overall supervision of Soviet experts.
, and also from Government of USSR. The Government of Pakistan has given him Pride of Performance
. He was also nominatd for Nobel prize.
Pakistan Steel is spread out over an area of 18660 acres (75.5 km²) (about 29 square miles (75 km²)) including 10390 acres (42 km²) for the main plant, 8070 acres (33 km²) for the township and 200 acre (0.809372 km²) for the 110 MG water reservoir. In addition it has leasehold rights over an area of {convert|7520|acre|km2|0} for the quarries of limestone and dolomite in the Makli and Jhimpir areas of Thatta district.
in and around Pakistan Steel green and beautiful through the addition of three unique projects: the Quaid-I-Azam Park, The Quaid-I-Azam Cricket Park and the Quaid-I-Azam Beach. The Quaid-I-Azam Park, which spreads out over an area of 45 acre (0.1821087 km²), consists of a series of six interconnected lakes, lush green lawns and grassy terraces, colourful flower beds, fountains, life- size steel-made models of wild and marine animals, a jogging track, a bird sanctuary and mini-zoo, as well as a children's play and recreational ground and boating facilities.
The other unique project, known as the Quaid-I-Azam Cricket Park, has been established amidst the picturesque surroundings of Steel Town, featuring sloping grassy terraces all around for spectators and four diagonally-located hillocks with seating arrangements to provide a panoramic view of the game.
This is spread over an area of 32000 sq. meters and is equipped with all the necessary facilities, conforming to international standards. The third project, Quaid-I-Azam Beach, is being developed with the aim to provide a seaside recreational spot to the employees of Pakistan Steel, especially those residing at Steel Town and Gulshan-e-Hadeed. Mohammad Mushaffay
Ahmed is majority times elected president of Pakistan steel mills union.
Pakistan Steel is also on its way to establish Quaid-I-Azam National Park over a vast area of 400 acres (1.6 km²) adjacent to Steel Town which shall be a tremendous contribution in the development of the environment.. The organisation also has a football team Pakistan Steel FC
that currently competes in the Pakistan Premier League
.
Tuwairqi Group of Companies, one of the Ieading business concerns in Saudi Arabia, also launched a $300 million steel mills project at Bin Qasim. The group will set up Tuwairqi Steel Mills (TSM), a state-of-the-art steel-making plant in the southern port city of Gawadar, Pakistan.
The Supreme Court on 8 August 2006 held that the entire disinvestment process of the Pakistan Steel Mills reflected a haste, ignoring profitability aspect and assets of the mills by the financial adviser before its evaluation. The transaction was the outcome of a process reflecting procedural irregularities, said the 80-page judgement in the PSM case.
On 23 June, a nine-member bench of the Supreme Court had annulled the sale of the country’s largest industrial unit to a three-party consortium and had directed the government to refer the matter to the Council of Common Interests within six weeks. It had declared the $362 million transaction with the Russian-Saudi-Pakistan investors as null and void.
Authored by Chief Justice of Pakistan Justice Iftikhar Mohammad Chaudhry, the judgement said the entire exercise reflected a haste by the Privatisation Commission (PC) and the Cabinet Committee on Privatisation (CCOP). The PC had processed the 30 March final report of the financial adviser the same day and a meeting of the PC board and a summary had also been prepared the same day when a six week time was mandatory to examine and fix a fair reference price for approval by the CCOP.
“This unexplained haste casts reasonable doubt on the transparency of the whole exercise and reflects CCOP’s disregard towards mandatory rules and materials, essential for arriving at a fair reference price,” it maintained.
The board had proposed to value the share of the mill at Rs17.43 but it was reduced to Rs16.18 without assigning any reason, the verdict said. The verdict said that keeping in view the annual net profit of the mill, its shares’ value should have been ascertained by offering 10 per cent equity of the mills on the stock exchange.
“A constitutional court would be failing in its duty if it does not interfere to rectify the wrong, more so when valuable assets of the nation are at stake,” the judgment said.
Government-owned corporation
A government-owned corporation, state-owned company, state-owned entity, state enterprise, publicly owned corporation, government business enterprise, or parastatal is a legal entity created by a government to undertake commercial activities on behalf of an owner government...
producer of long rolled steel
Steel
Steel is an alloy that consists mostly of iron and has a carbon content between 0.2% and 2.1% by weight, depending on the grade. Carbon is the most common alloying material for iron, but various other alloying elements are used, such as manganese, chromium, vanadium, and tungsten...
and heavy iron products in Karachi
Karachi
Karachi is the largest city, main seaport and the main financial centre of Pakistan, as well as the capital of the province of Sindh. The city has an estimated population of 13 to 15 million, while the total metropolitan area has a population of over 18 million...
, Sindh Province of Pakistan
Pakistan
Pakistan , officially the Islamic Republic of Pakistan is a sovereign state in South Asia. It has a coastline along the Arabian Sea and the Gulf of Oman in the south and is bordered by Afghanistan and Iran in the west, India in the east and China in the far northeast. In the north, Tajikistan...
. The Pakistan Steel Mill is the country's largest industrial undertaking having a production capacity of 1.1 million tonnes of steel. The enormous dimensions of the project can be visualised from the construction inputs which involved the use of 1.29 million cubic meters of concrete, 5.70 million cubic meters of earth work (second to Tarbela Dam), 330,000 tonnes of machinery, steel structures and electrical equipment.
Its unloading and conveyor system at Port Qasim
Port Qasim
The Port Muhammad Bin Qasim , also known as Port Qasim, is a seaport in Karachi, Pakistan, on the coastline of the Arabian Sea. It is Pakistan's second busiest port, handling about 35% of the nation's cargo...
is the third largest in the world and its industrial water reservoir with a capacity of 110 million impgals (500,069.9 m³) per day is the largest in Asia. A 2.5 km-long sea water channel connects the sea water circulation system to the plant site with a consumption of 216 million impgals (981,955.4 m³) of sea water per day.
However only 18 percent of this capacity is actually in use and the chairman of the mills has requested Rs12 billion to prevent closure of the mills.
History of Pakistan Steel Mills
After independence in 1947, it did not take long for Pakistan to come to the realization that progressive industrial and economical development would be impossible without the possession of a self reliant iron and steel making plant. The dependence on imports would cause serious setbacks to the country along with an extortionately high import bill which would be impossible to support.In 1968, the Government of Pakistan
Government of Pakistan
The Government of Pakistan is a federal parliamentary system, with an indirectly-elected President as the Head of State and Commander in Chief of the Pakistani Armed Forces, and an indirectly-elected Prime Minister as the Head of Government. The President’s appointment and term are...
decided that the Karachi Steel Project should be sponsored in the public sector, for which a separate Corporation, under the Companies Act, be formed. In pursuance of this decision, Pakistan Steel Mills Corporation Limited was incorporated as a private limited company to establish and run steel mills at Karachi. Pakistan Steel Mills Corporation concluded an agreement with V/o Tyaz Promexport of the USSR in January, 1969 for the preparation of a feasibility report for the establishment of a coastal-based integrated steel mill at Karachi.
Background
In 1956, M/S Krupp of Germany offered to set up a steel mill based on Kalabagh iron ore, coal and most other minerals available within about 11 miles (17.7 km). The project was shelved, the Chairman of PIDC, Mr. Ghulam Farooq, resigned. In June 1966, another German company M/S Salzgitter produced in Germany 5,000 tonnes of quality steel from 15,000 tonnes of Kalabagh iron ore in the presence of some international experts, and sold it to Volkswagen. The company offered in August 1967 to set up Kalabagh Steel Mill of over 0.8 million tonnes per year (mtpy) capacity based on Kalabagh iron ore and imported coal at an estimated cost of Rs. 1.542 billion (including foreign exchange cost of Rs. 878 million). Some European banks offered loans for this project, which confirms technical and financial viability of the project. PIDC selected a site with about 80% raw materials available within 11 miles (17.7 km). This offer was also shelved.In 1972, Chinese experts found a substantial quantity of iron ore in Nokkundi area of Balochistan. Steel experts from America and Japan confirmed its suitability for steel production and recommended to set up a mini-steel mill in Balochistan. Later on, this ore was found suitable for Pak Steel Mill after upgradation. “The News” of January 31, 1999 confirmed that offers from China and Iran for a mini-steel mill in Balochistan were under consideration of the government.In April 1968,President General M. Ayub Khan accepted the Russian offer for Kalabagh Steel Mill project, and the next President General Yahya Khan signed the project agreement with Russia. Subsequently, it transpired that Russia did not have the technology to produce steel from the Kalabagh iron ore. Instead of reviving the German offers based on local raw materials, site of the steel mill project was shifted to Karachi and Pak Steel Mill was established with a comparatively inferior machinery, based on 'imported' iron ore and coal.Construction of Pak Steel Mill was commenced at an estimated cost of Rs. 14.287 billion and commissioned at a cost of Rs. 24.7 billion in 1985, with an installed production capacity of 1.1 million tonnes per year (mtpy).On the average, about 70% to 80% of installed production capacity of 1.1 mtpy has been utilized during the last 17 years. The installed machinery is generally blamed for this inefficiency. For comparison, a Brazilian Steel Mill set up in 1956 with Japanese machinery and technology was producing 4.3 million tonnes steel annually with 13,000 employees(Newsweek, November 4, 1991), whereas the Pak Steel Mill commissioned in 1985 produced about 0.75 million tonnes steel in 1991 with 28,000 employees including 4,000 temporary.
Soviet Contribution to Steel Mill
In January 1971 Pakistan and the USSR signed an agreement under which the latter agreed to provide techno-financial assistance for the construction of a coastal-based integrated steel mill at Karachi. The foundation stone of this vital and gigantic project was laid on 30 December 1973 by the Prime Minister of PakistanPrime Minister of Pakistan
The Prime Minister of Pakistan , is the Head of Government of Pakistan who is designated to exercise as the country's Chief Executive. By the Constitution of Pakistan, Pakistan has the parliamentary democratic system of government...
Zulfikar Ali Bhutto
Zulfikar Ali Bhutto
Zulfikar Ali Bhutto was 9th Prime Minister of Pakistan from 1973 to 1977, and prior to that, 4th President of Pakistan from 1971 to 1973. Bhutto was the founder of the Pakistan Peoples Party — the largest and most influential political party in Pakistan— and served as its chairman until his...
. The mammoth construction and erection work of an integrated steel mill, never experienced before in the country, was carried out by a consortium of Pakistani construction companies under the overall supervision of Soviet experts.
Corporate Business and Net worth
Pakistan Steel not only had to construct the main production units, but also a host of infrastructure facilities involving unprecedented volumes of work and expertise. Component units of the steel mills numbering over twenty, and each a big enough factory in its own right, were commissioned as they were completed between 1981 to 1985, with the Coke Oven and Byproduct Plant coming on stream first and the Galvanizing Unit last. Commissioning of Blast Furnace No.1 on 14 August 1981 marked Pakistan's entry into the elite club of iron and steel producing nations. The project was completed at a capital cost of Rs.24,700 million. The completion of the steel mill was formally launched by the then-President of Pakistan on 15 January 1985. Pakistan Steel today is the country's largest industrial undertaking, having a production capacity of 1.1 million tonnes of steel.Founders of Pakistan Steel Mills
The real founders of Pakistan Steel Mills are Prof. Dr. Niaz Muhammad, Wahab siddiqui and Russian scientist Mikhail Koltokof. It was the hard work of Niaz Muhammad that thousands of scientists and technical staff got trained by him. His inspirations and innovations got him the highest award from President of PakistanPresident of Pakistan
The President of Pakistan is the head of state, as well as figurehead, of the Islamic Republic of Pakistan. Recently passed an XVIII Amendment , Pakistan has a parliamentary democratic system of government. According to the Constitution, the President is chosen by the Electoral College to serve a...
, and also from Government of USSR. The Government of Pakistan has given him Pride of Performance
Pride of Performance
Pride of Performance , is one of the highest civil award given and conferred by the Pakistan Government to Pakistan's citizens in recognition of distinguished merit in the fields of Literature, Arts, Sports, Medicines, and Science for civilians in most particular cases.The announcement of civil...
. He was also nominatd for Nobel prize.
Location and site
Pakistan Steel is located at a distance of 40 km Southeast of Karachi at Bin Qasim near Port Muhammad Bin Qasim. It was found to be an ecologically preferable location, alongside a tidal creek and having a wind direction away from the city of Karachi.Pakistan Steel is spread out over an area of 18660 acres (75.5 km²) (about 29 square miles (75 km²)) including 10390 acres (42 km²) for the main plant, 8070 acres (33 km²) for the township and 200 acre (0.809372 km²) for the 110 MG water reservoir. In addition it has leasehold rights over an area of {convert|7520|acre|km2|0} for the quarries of limestone and dolomite in the Makli and Jhimpir areas of Thatta district.
Social obligations
Pakistan Steel Mills, besides its core activities, has done a lot in making the environmentNatural environment
The natural environment encompasses all living and non-living things occurring naturally on Earth or some region thereof. It is an environment that encompasses the interaction of all living species....
in and around Pakistan Steel green and beautiful through the addition of three unique projects: the Quaid-I-Azam Park, The Quaid-I-Azam Cricket Park and the Quaid-I-Azam Beach. The Quaid-I-Azam Park, which spreads out over an area of 45 acre (0.1821087 km²), consists of a series of six interconnected lakes, lush green lawns and grassy terraces, colourful flower beds, fountains, life- size steel-made models of wild and marine animals, a jogging track, a bird sanctuary and mini-zoo, as well as a children's play and recreational ground and boating facilities.
The other unique project, known as the Quaid-I-Azam Cricket Park, has been established amidst the picturesque surroundings of Steel Town, featuring sloping grassy terraces all around for spectators and four diagonally-located hillocks with seating arrangements to provide a panoramic view of the game.
This is spread over an area of 32000 sq. meters and is equipped with all the necessary facilities, conforming to international standards. The third project, Quaid-I-Azam Beach, is being developed with the aim to provide a seaside recreational spot to the employees of Pakistan Steel, especially those residing at Steel Town and Gulshan-e-Hadeed. Mohammad Mushaffay
Ahmed is majority times elected president of Pakistan steel mills union.
Pakistan Steel is also on its way to establish Quaid-I-Azam National Park over a vast area of 400 acres (1.6 km²) adjacent to Steel Town which shall be a tremendous contribution in the development of the environment.. The organisation also has a football team Pakistan Steel FC
Pakistan Steel FC
Pakistan Steel FC is a Pakistani football club affiliated with Pakistan Steel Mills and is based outside the city of Karachi in the Pakistan Steel Township....
that currently competes in the Pakistan Premier League
Pakistan Premier League
The Pakistan Premier League is the first division of Pakistani football. It was established in 2004, in place of the National Championship by the Pakistan Football Federation.-Origins:...
.
Privatisation of Steel Mills
In May 2006, the government of General Musharraf privatised Pakistan Steel Mills. The consortium involving Saudi Arabia-based Al Tuwairqi Group of Companies submitted a winning bid of $362 million for a 75 per cent stake in Pakistan Steel Mills Corporation (PSMC) at an open auction held in Islamabad. the consortium of Saudi Arabia-based Al Tuwairqi Group of Companies, Russia's Magnitogorsk Iron & Steel Works and local firm Arif Habib Securities paid a total Rs21.6 billion ($362 million), or Rs16.8 per share, to take control of Pakistan's largest steel manufacturing plant. http://www.khaleejtimes.com/DisplayArticle.asp?xfile=data/business/2006/April/business_April9.xml§ion=business&col=Tuwairqi Group of Companies, one of the Ieading business concerns in Saudi Arabia, also launched a $300 million steel mills project at Bin Qasim. The group will set up Tuwairqi Steel Mills (TSM), a state-of-the-art steel-making plant in the southern port city of Gawadar, Pakistan.
Suo moto notice
In response to wide spread public outcry and call for action the Chief Justice of Pakistan took a suo moto action against the privatisation citing irregularities in the process. The verdict was delivered on 8 August 2006.The Supreme Court on 8 August 2006 held that the entire disinvestment process of the Pakistan Steel Mills reflected a haste, ignoring profitability aspect and assets of the mills by the financial adviser before its evaluation. The transaction was the outcome of a process reflecting procedural irregularities, said the 80-page judgement in the PSM case.
On 23 June, a nine-member bench of the Supreme Court had annulled the sale of the country’s largest industrial unit to a three-party consortium and had directed the government to refer the matter to the Council of Common Interests within six weeks. It had declared the $362 million transaction with the Russian-Saudi-Pakistan investors as null and void.
Authored by Chief Justice of Pakistan Justice Iftikhar Mohammad Chaudhry, the judgement said the entire exercise reflected a haste by the Privatisation Commission (PC) and the Cabinet Committee on Privatisation (CCOP). The PC had processed the 30 March final report of the financial adviser the same day and a meeting of the PC board and a summary had also been prepared the same day when a six week time was mandatory to examine and fix a fair reference price for approval by the CCOP.
“This unexplained haste casts reasonable doubt on the transparency of the whole exercise and reflects CCOP’s disregard towards mandatory rules and materials, essential for arriving at a fair reference price,” it maintained.
The board had proposed to value the share of the mill at Rs17.43 but it was reduced to Rs16.18 without assigning any reason, the verdict said. The verdict said that keeping in view the annual net profit of the mill, its shares’ value should have been ascertained by offering 10 per cent equity of the mills on the stock exchange.
“A constitutional court would be failing in its duty if it does not interfere to rectify the wrong, more so when valuable assets of the nation are at stake,” the judgment said.