KARACHI: The Privatisation Commission on Tuesday approved a 30-year lease structure for loss-making Pakistan Steel Mills (PSM) under which at least 7,500 of the 12,500 employees would be laid off, its head said. Built by the Soviet Union in 1970s, the state-owned facility (PSM) has become a huge drain on government resources and has not produced steel at its 19,000-acre facility since June 2015. That was when the national gas company cut its power supplies, demanding payment of bills of over $340 million. PSM has accumulated losses of over Rs163 billion and other outstanding debts. Privatisation Commission Chairman Mohammad Zubair said that a 30-year lease plan had now been approved, with Chinese and Iranian companies showing “interest” in taking over the vast factory on the outskirts of Karachi. He declined to name the interested firms. “Now the next step is cabinet approval of the lease structure, which we are certain of getting, after which we will seek expression of interest and move towards bidding,” Zubair said. “The whole process will take about four or five months.” Zubair said about 5,000 employees would be retained by the new investor while the remaining 7,500 would receive an “attractive separation package.” Last year, protests against the sale of loss-making Pakistan International Airlines (PIA) and a plan to lay off its surplus employees turned violent, killing at least two protesters and injuring dozens. The federal government promised the International Monetary Fund that it would privatise PSM and PIA as part of the $6.7 billion national bailout loan agreed in 2013. Though the IMF programme finished last September, the government failed to privatise either in time. While PIA remains operational, PSM has suffered decades of under-investment and would require huge upgrades to be competitive with steel makers in countries such as China. Under the lease agreement, proposed incentives include a 10-year tax holiday and duty-free import of plant and machinery. The government has also proposed a regulatory duty of at least 35 per cent on steel products for a period of five years to promote the local steel industry, according to lease structure documents seen by Reuters. The government will settle all of PSM’S liabilities before signing an agreement with any investor.