ISLAMABAD: The government is likely to incur a financial loss of around Rs10 billion for divestment of Pakistan Steel Mills (PSM), National Assembly’s Standing Committee on Industries and Production was informed on Wednesday.

The committee witnessed serious debate between members and officials over the uncertain future of the mill.

The committee, chaired by Asad Umar of PTI, expressed concern over the daily losses incurred by the PSM. Many members opined that if the government could not make the mill operational and financially viable, then it should privatise or sell it.

Government to incur Rs10bn loss if it privatises the mill

They noted that the mill suffered provisional losses of Rs4.09bn during the first quarter of 2016-17, while its accumulated losses up to Sept 30, 2016 were Rs167.315bn.

Its total liabilities up to Sept 30, 2016 stood at Rs177.77bn.

Most of the committee members were of the view that the mill was incurring huge financial losses and the government should privatise it as early as possible on ‘as is, where is’ basis.

However, PTI’s Asad Umar and Sajida Begum were not in favour of privatisation, arguing that the plant can be run efficiently if a professional CEO is appointed.

Mr Umar proposed the name of Zaigham Adil Rizvi, former CEO of Tuwairqi Steel Mills Limited (TSML), and sarcastically proposed Hussain Sharif as Chairman of the PSM Board.

Qaiser Ahmad Sheikh of the PML-N and Chairman Privatisation Commission Muhammad Zubair argued with each other on PSM’s present status.

Mr Sheikh sarcastically said that three years ago Muhammad Zubair had announced that the government would privatise the entity after making it fully functional.

Mr Zubair clarified that he had meant to say that the government would get a better price for the mill if it was made fully functional.

Mr Umar and Mr Zubair also argued over the strategy to deal with PSM as both had markedly different viewpoints on privatisation.

Mr Umar argued that the government deliberately took the PSM to this state so that people should say “get rid of it”.

Briefing the Standing Committee, Mr Zubair said the Cabinet Committee on Privatisation (CCoP) is scheduled to meet on Jan 18 to consider the sale of PSM as two potential buyers are willing to acquire the unit at a very long term lease.

However, his briefing was interrupted by the committee members and he was asked to share details of the new structure under which the PSM would be disposed of.

However, the committee was not given any details, which irritated Mr Asad Umar who levelled corruption charges on the PSM management.

“There is ongoing corruption in PSM and the union is involved in it too,” he alleged.

However, the officials of the PSM confronted him and the MNAs were asked to forward even a single example of corruption.

Mr Umar directed the PSM management to review the cases of 15 employees who have been served show-cause notice for pelting stones at the PSM building and smashing glass.

He also took up the issue of payments to pensioners and was told that the government is likely to approve three months (up to Dec 2016) salaries of employees.

Meanwhile Mr Zubair informed the committee that a lease-based transaction structure has been prepared for PSM.

“One potential party is an Iranian steel company and their team recently visited Pakistan to assess the worth of the entity and the second party is a Chinese company along with a local concern,” he said. “The new buyers would be given hire and fire powers,” he added.

Mr Zubair said the new dispose of structure of PSM will be considered by the Privatisation Board on Jan 16 after which it would be tabled before the CCoP on Jan 18. If the committee gives the go- ahead, then PC will invite Expressions of Interest (EoIs) and this process would take 45 days.

He said the present government inherited PSM with an accumulated liability of approximately Rs120bn and capacity utilisation of almost zero per cent in 2013.

PSM had been given approximately Rs50bn in the form of bailout packages between the years 2008-2013.

Members who attended the meeting included Sardar Mansab Ali Dogar, Qaiser Ahmad Sheikh, Sahibzada Muhammad Nazeer Sultan, Dr Shezra Mansab Ali Khan Kharal, Syed Imran Ahmad Shah, Ms. Sajida Begum, Iftikhar-ud-Din, Chaudhry Riaz-ul-Haq, Rana Muhammad Qasim Noon, Maulana Muhammad Gohar Shah, Muhammad Muzammil Qureshi, and Alhaj Shah Jee Gul Afridi.

Published in Dawn, January 5th, 2017