PSM transaction structure awaits CCOP’s approval

ISLAMABAD: Transaction structure of Pakistan Steel Mills’ (PSM) revival plan has been presented before the cabinet committee on privatisation for the final approval, officials said on Wednesday.

The transaction structure was already approved by privatisation commission board, the officials told Minister for Privatisation Mohammedmian Soomro during a meeting. Secretary privatisation and other senior officials of the ministry and privatisation commission attended the meeting.

“The government is earnestly working for the revival of PSMC, through the induction of capital and technology, thus bringing the entity to operate at its full production capacity,” Soomro said.

The minister urged the officials to make all out efforts to resolve the related issues so the targets could be achieved in stipulated time and also in an efficient and effective manner.

“Privatisation is a major part of current government’s economic reforms agenda, and urged all concerned to expedite the resolution of issues which might hinder the timely completion of these transactions,” he said.

“The focus through privatisation is multi-pronged. It is not only profit-incentive but also to bring more efficiency in various public sector entities, and create employment, debt reduction and poverty alleviation.”

PSM revival is critical to reduce dependence on steel imports, increase steel production and save precious public funds. PSM was heavily overstaffed with over 9,300 employees and the government planned to conduct layoffs after paying Rs20 billion. In November, PSM sacked 4,544 employees.

PSM remained in profit from 2000-01 to 2007-08 and had a profit of over Rs2.3 billion in 2007-08 on record sales of Rs42 billion and payables of only Rs7 billion.

However, PSM’s mishandling has resulted in debts of over Rs230 billion whereas losses piled up to over Rs160 billion.

Successive governments have spent more than Rs90 billion in different bailout packages for PSM. PSM monthly bill in salaries and retirement dues is over Rs750 million. In addition, thousands of acres of precious lands are lying unutilised as PSM has not undergone any expansion.

The minister was briefed about the progress regarding various other public sector enterprises (PSEs) to be privatised in the current fiscal year, and which have also been made part of the performance agreement of the division.

The PSEs that were discussed in the meeting are included in the active privatisation list, and most of them are at advanced stages of privatisation.

These entities include Services International Hotel, SME Bank, House

Building Finance Corporation, Convention Center and NPPMCL. Final bids (and response) are linked to market conditions.