Pakistani state media reported on Wednesday, that the Ambassador of the Russian Federation to the Islamic Republic of Pakistan, Albert P. Khorev has announced cooperation with Islamabad this year in the energy and industrial sectors, including the modernization of a state-owned steel mil.
Pakistan Steel Mills (PSM) were assed by a team of technical experts from Russia, last month. PSM is one of several firms that Pakistan wants to sell to revive the company from losses as it strives to deliver reforms under a $7 billion International Monetary Fund bailout.
Islamabad has been allocating billions of dollars to support cash-strapped state-owned enterprises, including some of the country’s largest loss-making entities, including Pakistan International Airlines (PIA) and Pakistan Steel Mills (PSM), once a key supplier of nearly half of the nation’s steel needs. However, PSM has been in steady decline since 2008, attributed to corruption, mismanagement, and a lack of investment.
As of August 2024, the accumulated losses of the mills stood at over $800 million. PSM has not produced steel at its 19,000-acre facility since June 2015.
“Ambassador Khorev has said that Russia and Pakistan will focus on cooperation in energy and industry including the modernization of the Steel Mills, agriculture and transport in 2025,” state news agency, the Associated Press of Pakistan (APP), said.
Cold War rivals, Pakistan and Russia, have been strengthening their relationship in recent years through increased dialogue and trade, including in 2023, with Pakistan beginning to purchase discounted Russian crude oil that had been banned from European markets due to Russia’s war on Ukraine and Islamabad also receiving the first shipment of liquified petroleum gas from Russia that year.
It is targeting imports of 100,000 barrels per day (bpd) of crude oil from Russia, a significant increase compared to the 154,000 bpd it imported in total in 2022, aiming to reduce the country’s import bill, alleviating a foreign exchange crisis, and curb inflation.
However, higher shipping costs and lower-quality refined products compared to crude from Pakistan’s main suppliers, Saudi Arabia and the UAE, are reducing the expected benefits.
Energy imports make up the majority of the South Asian country’s external payments.
“Russia stands ready to intensify cooperation with Pakistan on the use of international transport corridors,” APP quoted the Russian ambassador as saying.
Some of the projects to be built in collaboration with Russian companies are the Pakistan Stream gas project, also known as the North-South gas pipeline. The 1,100 km (683-mile) pipeline is set to transport imported LNG from Karachi’s Arabian Sea coast to power plants in Punjab’s northeastern region. Meanwhile, the Trans-Afghan Multimodal Transport Corridor is being developed to facilitate trade, running from northeastern Kazakhstan through Uzbekistan, Afghanistan, and Pakistan, before reaching the port of Jebel Ali in the United Arab Emirates via sea.