January 15, 2006	Sunday	Zilhaj 14, 1426

ISLAMABAD, Jan 14: The Employees Management Group (EMG) has demanded of the government to sell Pakistan Steel Mills Corporation (PSMC) to its employees. It has also called upon the Privatization Commission to extend its employees the mills along with its present assets without any unbundling.

In a detailed letter of January 1, 2006 to Iftikharul Haque, chairman/member, committee on privatization of PSMC, a copy of which was also made available to Dawn, the EMG said that it should be allowed to retire outstanding debt of Rs7.76 billion from the land proceeds according to a negotiated schedule.

A pre-bid conference for the privatization of Pakistan Steel will be held here on January 16. Five pre-qualified bidders, which will be attending the conference, include: Al-Tuwariqi Group of Companies, Saudi Arabia, with Arif Habib Group of Companies of Pakistan; the government of Ras Al Khaimah (UAE); International Industries Ltd (Pakistan) and Industrial Union of Donbass (Ukraine); Magnitogorsk Iron & Steel Works Open JSC, Russia; and Noor Financial Company, Kuwait.

“Present liquidity, which is primarily meant for repairs and revamping of the mills, should not be disturbed. The Pakistan Steel Board may, however, consider reasonable percentage for payment of the government of Pakistan as ‘dividend’, as this is for the first time Pakistan Steel has come in to profit,” the EMG said.

It said that instead of 75 per cent, Pakistan Steel employees should be offered 26 per cent shares of the book value along with the management control, which would reduce the bid money to be paid to the government within five years time. “This will not be an extra favour because the government has already agreed to extend similar facilities to a foreign investor in PTCL,” the letter added.

The letter also said that the restrictions with regard to $200 million net worth and acceptance of “our bid i.e. only if 60 per cent or more employees favour the proposal” should be withdrawn. “In fact, it is as per the terms of the memorandum of agreement settled between the government and the All Pakistan State Enterprise Workers Action Committee (APSEWAC).”

“It has been repeatedly conveyed during various meetings with the Privatization Commission that the employees are against the privatization of Pakistan Steel. However, if the government has decided to disinvest Pakistan Steel, the EMG will definitely like to bid to ensure that the organization does not disintegrate and its assets do not fall in the hands of outsiders and the prospective buyers may not monopolize steel manufacturing in the country at the cost of national resources and expertise gained over decades.”

The EMG points out that the prevailing policy of the Privatization Commission hinges on the following major decisions:

Only 4,545 acres of land along with the plant will be given to the bidders; the downstream industrial land of the corporation will be handed over to the National Industrial Park on a throwaway price of Rs3 million, and Rs1.5 million per acre developed and undeveloped land on free hold basis, whereas the prevailing market value of this land is more than Rs20 million per acre; money recovered from the sale of land is to be deposited with the government of Pakistan as a divided even otherwise it is not part of the profit; the rest of the land, including Steel Town and all other assets will go to the government. However, the Sindh government indicated in clear terms that all land excluded form the bidding will revert to the provincial government because it is to be utilized only for the purpose it was allocated; and the Pakistan Steel management will immediately clear the deferred payment of Rs7.76 billion initially scheduled for repayment with effect form the year 2013 from its present liquidity, whereas it has been asked to get a credit line of up to Rs2.5 billion sanctioned for its operational expenses.

“Your kind offer, when seen in the context of above decisions, is a non-starter right from the beginning. We also feel that many of the foreign bidders will also be reluctant to offer a reasonable bid in the absence of enough land for its future expansion,” the letter said.

“In view of the above discussions, we request the president and prime minister to consider our recommendations, if they sincerely believe in promoting the employees of Pakistan Steel,” the letter added.