ISLAMABAD, May 30: The Supreme Court, probing the privatisation of the multi-billion Pakistan Steel Mills, on Tuesday asked the finance director of the corporation to help it evaluate the historical and market value of the mills.
The court is considering three private petitions which have challenged the sale of the country’s largest industrial complex for what the petitioners call a “paltry sum” of Rs21.68 billion.
Led by Chief Justice of Pakistan Justice Iftikhar Mohammad Chaudhry, a nine-member larger bench also directed Advocate Wasim Sajjad, Pakistan Steel Mills’ legal counsel, to provide evaluation reports of the mills conducted by M/s Sadruddin Associates, M/s Aqeel Karim Dhedhi Securities (Pvt) Ltd and M/s Nanji. It also observed that it would peruse in detail the balance sheet of South Asia’s biggest industrial concern.
Barrister Zafarullah Khan of the Watan Party, the Pakistan Steel People’s Worker Union and Pakistan Steel Mills Labour Union have questioned the sale of 75 per cent stake and management control of Pakistan Steel Mills to a consortium of Russia’s Magnitogorsk, Saudi Arabia’s Al Twwariqi and Arif Habib Securities for $362 million (Rs21.68 billion) at a rate of Rs16.80 per share on March 31.
During hearing, Justice Javed Iqbal, a member of the bench, also wondered whether the Sindh government was also consulted during the privatisation of the mills when the site was handed over to the federal government with the condition that it would not be used for any other purpose.
Quoting the Pakistan Steel Mills’ balance sheet from its reply, Barrister Zafarullah Khan stated that as on December 2005 the total equity of the steel mills (minus land) was Rs35 billion.
Highlighting contradictory replies of the respondents, Barrister Zafarullah said the Privatisation Commission had painted a bleak picture of the Pakistan Steel Mills by stating that it was inefficient, cash starved and badly needed investments for new plants and machinery.
On the other hand, the Pakistan Steel Mills claimed that it wiped out its entire losses and carried forward an accumulated profit of Rs3.98 billion as on June 2005. The net profit during July-December 2005 was Rs140 million while the loss was only notional and on paper only.
Since its inception, the corporation paid over Rs64.40 billion in the form of taxes and duties to the national exchequer while a saving of $4.10 billion was also achieved.
M/s Sadaruddin Association, a year ago, had evaluated the price of developed land at Rs10 to Rs11 million per acre and Rs7 to Rs8 million per acre of partially developed land. Out of 19,000 acres, the government only offered plant and machinery located on 4,457 acres for bidding.
Barrister Zafarullah said the evaluation of Pakistan Steel Mills was also conducted on behalf of the Privatisation Commission by M/s Global City Marketing (Pvt) Ltd, a subsidiary of the Citi Bank and Arif Habib Securities, also happens to be a buyer of the plant.
Members of the consortium, bidding for the plant, were earlier competitors but they formed a “cartel” to buy the mills, he said, adding the mills was put for bidding without any reference price.
