Closed Pakistan Steel Mill Accumulates Rs. 79.3 Billion in Losses Over 3 Years
Pakistan Steel Mills (PSM) accumulated losses of Rs. 79.3 billion over the past three fiscal years despite remaining closed since 2015, with interest on old loans accounting for nearly three-quarters of the losses.
According to Ministry of Industries data, PSM recorded a loss of Rs. 24 billion in fiscal year 2025-26 alone. The mill has remained non-operational since the government shut it down in June 2015.
From FY2023-24 to FY2025-26, interest expenses accounted for Rs. 57.4 billion, or about 72 percent, of PSM’s total losses. Interest payments reached Rs. 17.7 billion in FY2025-26, including Rs. 11.8 billion on government loans and Rs. 5.2 billion on commercial bank loans.
The Central Monitoring Unit had previously recommended restructuring PSM’s debt, but the measure was not implemented. As of FY2024-25, the mill’s cash development loan stood at Rs. 108 billion, carrying an annual interest cost of about Rs. 11.5 billion. The unit also had more than Rs. 40 billion in bank loans, mainly from the government-owned National Bank of Pakistan.
The CMU said debt restructuring, including debt-to-equity swaps and negotiated write-downs, was needed to reduce liabilities that were limiting the potential for strategic investment in PSM. It also recommended moving liabilities into a separate holding company as part of a government led debt cleanup.
Despite having no operations, PSM continued to incur other expenses. Employees received Rs. 3.9 billion in salaries over the past three fiscal years, while Rs. 9.1 billion was spent on fuel, electricity, water and gas.
The CMU said PSM also faced technological obsolescence, accumulated liabilities and a lack of production capacity, leaving it unable to compete with imported steel. It recommended exploring joint ventures with global steel manufacturers to bring technical expertise, foreign investment and access to export markets.
The monitoring unit warned that without changes to subsidy management, debt management and operations, PSM and other trading state owned enterprises would continue to create financial pressure on the government.
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