KARACHI - Some dubious sale deals about Pakistan Steel Mills have caused millions of rupees losses to the PSM besides exposing favouritism that has annoyed most of the stakeholders, The Nation learnt on Friday. The sources concerned revealed that the PSM sold billets to an influential dealer at much lower rates than what some bidders had offered. It was further revealed that during the fiscal year from July 2008 to May 2009, 36,000 metric tonnes of billets and, especially SAE 1008 and SAE 1010 were sold out to Al-Abbas Steel. There have been reports that the owner of Al-Abbas Steel, Riaz Laljee, has strong links with PPP politicians in government, casting its shadow even on the presidency, thus affecting the sales revenue of the PSM and damaging its image. Al-Abbas is stated to have low capacity than the purchases they made during the last five months and the said party, in fact, is selling the items purchased from PSM in the open market at double the profit. Al-Abbas Steel only shows interest in buying billets, and despite their low capacity, PSM is selling billets to them, causing great financial loss to the mills, the source added. It is worth mentioning here that the PSM has been served a show cause notice by the Competition Commission of Pakistan (CCP) for the evident discrimination in the sale of billets. The case was submitted to the CCP by Frontier Foundry, another major buyer of steel product, as their order was rejected despite the fact that Frontier Foundry had offered Rs 5000 per tonne more than the set price of steel product. The price of billets is Rs 34,000 to Rs 35,000 per metric tonne; its by products are also of high cost and the mill can earn good profit if it adopts a transparent and fair way of sale by rejecting the favouritism, the source added. Meanwhile, PSM is facing low production and sale for thee last few months and almost stopped working last month because of shortage of raw material. The low production rate of PSM is due to number of reasons and one of the reasons likely to affect the production and sale of PSM is the favour given by the government on imported steel products and ship breaking, the sources maintained. The sources stated that the government has reduced import duty on finished steel products, similarly, ship breaking industry has also been granted some benefits. These offers will surely boost the business of these industries, however, undermining the sales of PSM. So, if the sales are low even what would be the purpose of high production? The PSM has demanded of the government to revoke these orders. During past year, the prices of raw material remained very high and PSM has to import raw material for its production. Its cost almost stood at Rs 80,000 to Rs 85,000 per tonne during last year. Now, the prices have gone down and are at almost half of the price of that time. It is now Rs 44,000 per tonne. This has in turn affected the production cost of the PSM, while the sales of PSM were reduced up to 50 percent. It is worth mentioning that the government has also not supported PSM for import of raw material and it has no resources of its own to afford such a high priced raw material. It is said that now, after huge deficit in the PSM revenue, the government has decided to induct Rs 4 billion in PSM to improve its poor financial position. PSM has now placed new orders for raw material, as internationally the prices of steel have gone down significantly, and two ships carrying100,000 tonne iron ore have arrived in PSM. It is expected that the production of PSM will be increased as the cost of production goes low. Internationally, there is a sharp decline in oil prices which brought the ship fares down to reasonable level. This factor will help PSM a lot. Now, it is expected that the price of finished steel product will come equal to its cost of production, bringing down the loss ratio, the sources added. In the time of crisis, PSM has utilised the funds of its employees as loan for keeping the mills in running condition. It was to meet the expenditures of the mills; now, it is hoped that after getting grant from the government, financial condition of PSM will be stable, the source stated. It was pointed out that the maintenance of plants at the steel mills is now an important issue as when the raw material was not imported, PSM has used local raw material to keep the plants in running condition. Consequently, two batteries of an oven were destroyed. However, one out of these two has been repaired at a cost of almost Rs 1 billion. It is now working, while the second one is now under maintenance. The problem is not only with the supply of material or plants. Another factor that has declined production is that it lacks technical hands at production directorate. Some officials have little or no knowledge about the steel industry. This state of affairs has also affected the policy making of the PSM.