ISLAMABAD: Russian Ambassador to 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 mill, Pakistani state media reported on Wednesday.
A team of technical experts from Russia was in Pakistan last month to assess Pakistan Steel Mills (PSM), one of several firms Pakistan wants to sell to revive loss-making entities as it strives to deliver reforms under a $7 billion International Monetary Fund bailout.
Islamabad has for years been pumping billions of dollars into cash-bleeding state enterprises to keep them afloat, including one of the largest loss-making enterprises, Pakistan International Airline, and PSM, once the producer of almost half the country’s steel needs but which has been in decline since 2008 due 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.
Pakistan and Russia, once Cold War rivals, have strengthened their relationship in recent years through increased dialogue and trade, including in 2023 when Pakistan began purchasing discounted Russian crude oil that had been banned from European markets due to Russia’s war on Ukraine. Islamabad also received its first shipment of liquified petroleum gas from Russia that year.
It is targeting 100,000 bpd of imports from Russia, compared with the total 154,000 bpd of crude it imported in 2022, in the hopes that will lower its import bill, address a foreign exchange crisis and keep a lid on inflation.
However, the benefits are being offset by increased shipping costs and lower quality refined products compared with the fuels produced with crude from Pakistan’s main suppliers, Saudi Arabia and the United Arab Emirates.
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.
These include the Pakistan Stream gas project, also known as the North-South gas pipeline, which is to be built in collaboration with Russian companies. The 1,100 km (683 mile)-long pipeline will deliver imported LNG from Karachi on the Arabian Sea coast to power plants in the northeastern province of Punjab. Another corridor is the Trans-Afghan Multimodal Transport Corridor, which will run from northeastern Kazakhstan via Uzbekistan, Afghanistan, and Pakistan, and onward by sea to the port of Jebel Ali in the United Arab Emirates.
The statement also quoted Khorev as saying Russia was considering being involved in the modernization of the Quetta-Taftan railway line, one of the main railway lines in Pakistan. and increasing maritime cargo transportation.
