MUSHTAQ GHUMMAN

ISLAMABAD: National Assembly Standing Committee on Industries and Production headed by Asad Umar scheduled to meet on Thursday (tomorrow) will consider three-phased $ 1.292 billion Pakistan Steel Mills (PSM) rehabilitation plan for 1.1 million tons per year , well informed sources in PSM told Business Recorder.

Pakistan Steel is on active list of privatization since 2014. On the basis of the report of financial advisor, Privatization Commission proposed a leasing option for the approval of CCoP in January 2017. Since June 10, 2015 the production activity at Pakistan Steel Mill has been stopped mainly due to the stoppage of natural gas supply by M/ s SSGC at normal parameter and flow. As a result, the following installation and machinery / equipment have been affected: (i) Thermal Power Plant- boilers and water treatment plant; (ii) steel making department- boilers and mixer; (iii) coke oven battery- hot preservation; (iv) blast furnaces- complete stoppage due to shutdown of turbo blower station at TPP that alternatively stopped due to shutdown of boilers at TPP; and (v) Sea Water Pump House- stoppage of sea water pump house caused accumulation of silt in water intake channel including sever damage to civil structure of tank, Pipe line etc.

The source said, successful restart of equipment and plant cannot be guaranteed unless these are put into operation after required repair and maintenance to ensure their reliability. However, deplorable condition of equipment/plant is not the only hurdle.

Key requirements are as follows: (a) Finance - with no funds in treasury and no means of profit, the company is in utter financial chaos, and has over Rs. 200 billon financial liabilities. Funds can be generated by selling land and current inventory (finished products, scrap). As approved by PC Board, funds can also be arranged through the leasing option; (b) Human Resource- there is non-availability of skilled manpower, which is essential to run the plant (BF, COBP, SMD, TPP, Jetty etc.) including Russian trained personnel trained in third country and local-trained personnel under the supervision of Russian experts at Metallurgical Training Center, PSM. Majority of the manpower has retired or will be retiring soon and no properly trained/competent personnel exist to succeed them; (c) Proper management and structure - at present out of 8 directorates not even a single directorate exists. Out of 25 General Managers, there are only 3 existing. Similar trend continues lower in the hierarchy of the organization. Work is being executed on an ad-hoc basis and major leadership deficit exists due to inefficient and inadequate administrative machinery; and (d) Asset Reliability and Availability- with years of no sustainable operation, preservation and upkeep natural degradation has rendered most equipments and plant inoperable and unreliable. For satisfactory return to service, majority of plant functions such as Thermal Power Plant, Blast Furnaces, Steel Making Department, Water Supply department including Sea Water Pump House, Power Distribution Network department, Hot Rolling Mill and Jetty, need capital repair for continued operation.

On the basis of draft technical report submitted by Sino Steel and upgrading plan provided by CHMC and Tyazhpromexport, the rehabilitation cost will be $ 112 million which are as follows.

Revival of Plant for 1.1 million tons per year and funding requirements are as follows: (i) Blast Furnaces – category II repair of BF 1 with enhanced work, repair of hot blast stoves –& 18 (30) million; (ii) Thermal Power Plant – major repair of boilers turbo generators, turbines and turbo blowers – $ 05 million; (iii) steelmaking/ casting facility – addition of ladle furnace with vacuum de-gassing, replacement of boilers of two LD converters casting machines – $ 26 million; (iv) Oxygen Plant – Capital repair of two air compressors and cold box – $ 08 million; (v) Hot Strip Mill – complete replacement of process computerized system (PCS) including thickness gauge and width measuring system, thyristor control and power of main drives and replacement of ventilation system in control rooms – $ 20 million; (vi) Cold Rolling Mill – modernization, replacement of electronic DC control system of reversible mill and temper mill – $ 15 million; (vii) refractories – capital and general repairs – $ 05 million; and (viii) miscellaneous – in -house repairs – $ 15 million.

Phase-II (Expansion plan for 1.5 MTPY); (i) Jetty – 01 new unloader, revamping of the existing 2 unloaders, Revamping of the Wharf Conveyors – $ 10 million; (ii) Ramaterial handling - revamping of 2 Universal machines, 2 single boom turning stackers, 2 reclaimers, one new universal machine along with conveyor or stock yard two new storage banks – $ 10 million; (iii) sintering – coke crusher and cold screen, redesign suction, replacement/ modification of electro-precipitator, replacement of automation system – $ 10 million; (iv) coke oven plant – refurbishment of automation and control – $ 10 million; (v) iron making – repair of BFs with enhanced work & oxygen enrichment in hot blast and addition of pulverized coal injection system – $ 10 million; (vi) Steelmaking – revamping of electrical & hydraulic system, replacement of automation & control system of two LD converters, installation of 3rd converter with slag splashing technology with all three converters , revamping of billet caster and slab casters and upgradation of main cranes – $ 50 million; (vii) light section mill – conversion of existing 800 mm billet mill into medium and heavy section mill – $ 20 million; (viii) hot strip mill – reconstruction/revamping of re-heating furnace and its automation system, technological equipment, roll change mechanism of roll grinding shop, modernization of coilers, repair/ revamping of laminar cooling system, modernization of hydraulic AGC for last 3 stands, electrical/ thyrister system automation and process control system – $ 70 million; (ix) cold rolling mill – major overhauling of various process and allied mechanical, hydraulic, electrical, automation systems etc. – $ 25 million; (x) oxygen plant – replacement of existing vacuum insulated pipelines, conversion of reversing exchanger system of cold boxes, one cold box with argon gas attachment along with air and oxygen compressors(15000m3/hr. installation of cold oxygen liquid line, replacement of sea water system industrial water closed circuit system – $ 30 million; (xi) power distribution – modification of various power supplies to different units/ DSs – $ 05 million; (xii) water supply – modification/ repair/ restoration of water supply and sewerage system – $ 08 million; (xiii) air steam & gas – modification/ repair/ restoration of air steam and gas network – $ 10 million; ( xiv) thermal power plant – replacement/ major repair of boilers, turbo generators, and turbo blowers– $ 10 million; and (xv) Railway– replacement of unserviceable rails, sleepers, timbers, realignment of tracks– $ 02 million.

Phase III (expansion plan for 3.0 MTPY) : (i) Jetty – new lxl000t/h grab type ship unloader, extension of jetty further by 3000 Meters along with enhancement existing conveyers and conveyers drives – $ 9.94 million; (ii) raw material handling – expansion of primary stock yard, enhancement of conveyer for additional load, two new universal machines, one new stacker & one new reclaimers, extension in blending yard and allied equipment facilities $ 25.47 million; (iii) sintering – new 280 m2 sintering machine – $ 39.47 million; (iv) coke oven and by product Plant – extension of coal yards, two universal machines, two new coke batteries of 50 chambers, new byproduct plant, new wet quenching unit – $ 95.09 million; (v) iron making – Nnw BF of volume 2200 m3 - 2500 m3 – $ 122.88 million; (vi) steel making – new 1300 hot metal mixer, 3 new LD sub-lance systems, two new LFs, One new VD, revamp automation and control system, new billet and slab casters – $ 94.44 million; (vii) hot strip mill – revamping and improve rolling mill capacity and inclusion of 3rd reheating furnace – $ 23.74 million; (viii) cold rolling mill – revamping of pickling line, addition of acid regeneration plant and batch annealing furnaces, new double stand reversible mill (0.6 mtpy), new GP plant, colour coating line (subject to market study) – $ 195.97 million; (ix) oxygen plant – new 15000 m3/hr oxygen plant with supporting utility facilities – $ 14.59 million; (x) refractories and lime production – new rotary kiln, new dolomite, alumina brick lines, revamping of existing lime kilns, extension of raw material storage facilities – $ 18.87 million; (xi) thermal power plant – new 2X100 MW generation units, new 2 boilers and auxiliary equipment, new 2 Blower stations for BF with 2 turbine, blowers and auxiliary equipment – $ 151.59 million;(xii) water supply – new pipe work for industrial, potable, and seawater, water drainage and sludge treatment – $ 12.75 million; (xiii) utilities – new utility pipe work for BF gas, coke oven gas, natural gas, oxygen, nitrogen, steam etc. – $ 4.14 million; (xiv) utilities for TPP – new utility pipe work including expansion of centrifugal type air compressor – $ 12.73 million; ( xv) power distribution network – one new substation with one set of 132kv GIS power distributor, 33 kv distributors, two loaded voltage adjustable transformers, shop substation for each plant – $ 41.09 million; (xvi) railway & road facilities – new supporting railway and road network including vehicles and locomotives – $ 26.36 million; (xvii) process and engineering laboratories – chemical and physical testing facilities, modification and further addition of updated testing equipments – $ 8.43 million; and (xviii) Comm. & signaling – new supporting communication and signaling devices – $ 0.77 million.

According to sources, required financing for phase 1 (revival plant for 1.1 MTPY) will be $ 112 million, followed by $ 280 million for second phase for (expansion plan 1.5 MTPY and $ 900 million for phase three (3 MTPY), totaling it to $ 1.292 billion.

The sources said all the required maintenance and capital repair of essential equipment mentioned is mandatory. Renovation of electrical equipment especially large motors and HT/LT Cubicles) and 132 KV transmission line namely MSDS and TPP is imperative. Renovation of automation control system of all the critical plant i.e. TPP—TBS, BF, HSM, CRM, COBP, Jetty etc. is essential.

It has also recommended induction of required, qualified and experienced manpower and to arrange their training at MTC under the supervision of Russian experts and induction of required management, generation of fund, comprehensive plan for revival by Privatization Commission.