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Pakistan and Russia have signed an agreement to revive the Pakistan Steel Mills (PSM), which has been lying closed since 2018 after incurring monumental losses.

The agreement to restart and expand steel production in the Karachi-based project was signed at the Pakistan Embassy in Moscow on Friday, marking a new chapter in bilateral cooperation, reported state-run Associated Press of Pakistan (APP).

Originally, it was former Pakistan Prime Minister Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) government that had launched an initiative to revive the steel mills, triggering a race between China and Russia to get the contract. 

 

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Although the PTI government was favouring China in landing the deal and had even begun negotiations with a Chinese firm, talks could not materialize and the project finally landed with the Russians, who had originally helped build the mill and claimed that they were better suited to reviving it.

Haroon Akhtar Khan, Special Assistant to Pakistan’s Prime Minister, is currently on a visit to Russia, and said PSM’s revival with Russia’s support reflects the two countries’ shared history and “commitment to a stronger industrial future”. 

The PSM was built with assistance from the former Soviet Union in 1971, and seen as a beacon of Pakistan-Russia ties. It had a cumulative profit of PKR 9.54 billion up to financial year 2007-08, during the tenure of the then president, Pervez Musharraf.

However, ill-placed decisions like appointment of thousands of new recruits and the global recession of 2008 triggered the mill’s downfall.

It recorded a loss of PKR 16.9 billion in 2008-09, which jumped to PKR 118.7 billion in five years. Over the next 10 years, its losses continued to swell, reaching PKR 200 billion at the end of its tenure on May 31, 2018. 

Notably, successive governments of the Pakistan People’s Party (PPP) and the Pakistan Muslim League-Nawaz (PML-N), which had been in power from 2008 to 2018, failed to efficiently run this industrial behemoth.