KARACHI, May 28: Representatives of more than 50 labour, political, social and human rights organisations have expressed their strong reservations over the process of the privatisation of the Pakistan Steel, and described the sale of the national asset as ‘the biggest scam’ in the country’s history.

They were speaking at a one-day consultative meeting held here on Sunday under the auspices of the Labour Education Foundation under the title: Steel Mill Privatisation – A Fraud. The meeting was chaired by Mr Saleem Raza, Secretary of the LEF.

Speakers on the occasion pointed out that the Rs300 billion worth concern had been handed over to the private sector parties at a throw-away price of Rs21.75 billion. They claimed that under a pre-planned conspiracy, it had been handed over to some favourite parties. The conspiracy, they added, had been hatched over the past six years.

They alleged that it had already been decided to hand over the PS to a consortium of Russia’s Magnitogorsk Iron & Steel Works Open JSC, Saudi Arabia-based Al-Tuwairqi Group of Companies and a local firm Arif Habib Securities whereas the bidding process was for its privatisation on March 31 was just an eyewash. They wondered that the auction, which the Privatisation Commission had taken one whole year to prepare for, lasted just 30 minutes.

They pointed out that it was only a day before the auction was held, that a $130 million steel factory, Al-Tuwairqi Steel Mills, was inaugurated and a piece of 220-acre land was obtained on rent from the PS for the new concern. They added that 45 million cubic feet gas and 180 megawatt electricity was also sanctioned for the group.

They quoted an ex-chairman of mills, Haq Nawaz Akhtar, as saying that the PS would have fetched a higher price even if sold as scrape.

They said that only two days before the auction, the Al-Tuwairqi Group had signed Head of Terms (HoT) with the Sui Southern Gas Company for the supply of 45 million cubic feet natural gas for 10 years and the contract was extendable for another 10 years. They feared that with the PS in its ownership, the group might establish its monopoly on the whole steel industry in Pakistan which would ultimately result in a sharp increase in the prices of iron and steel products, dealing a blow to a large number of local industrial concerns.

The participants said that before the privatising of the PS, all bank loans outstanding against the mills had been paid off so that the new owners did not have any liability. In this regard, they added, the last instalment of Rs2.5 billion Habib Bank loan had been cleared by the government.

They said that until 1999, the mill was burdened under Rs19 billion loans and its annual loss stood at Rs9.326 billion. Later, it was administratively handed over to retired military officers who started sacking workers to curtail the losses. In 2000, the PS had a workforce of 20,533 which had shrunk to 13,080 now.

The speakers said that according to the PS finance director, the mills had generated Rs26.1 billion revenue in 2000 and its pre-tax profit stood at Rs 4.85 billion. They recalled that on Oct 25, 2005, PS chairman Gen Abdul Qayoom addressed factory workers and announced that in the year 2004-05, the mills had generated Rs 31 billion revenues and its pre-tax profit was Rs10 billion. He had quoted the tax amount paid to the government at Rs8.9 billion.

The labour leaders pointed out that present value of the PS land, at the current rate of Rs 20 million per acre, was around Rs92 billion whereas the mills’ other assets had been estimated at more than Rs150 billion. Furthermore, they added, that the new owners had been given an inventory of Rs7 billion kept ready in stores, besides finished products worth more or less the same amount.

They said that besides the precious land on the coastal belt near Port Qasim, the other assets of the mills include Steel Ore Plant in Thatta district, water supply plant of 110-mgd, thermal power plant, oxygen power plant, 72-km railway line, 14 locomotives of 800 horsepower each and more than 100 railway wagons. They claimed that only these assets were worth more than Rs150 billion.

They said the thermal power plant of the PS supplied electricity to the mills and its township while selling the surplus power to the KESC. Its oxygen plant supplied oxygen to various industrial units and hospitals.

The labour leaders deplored that the PS had been sold for an amount which made just two and half years’ tax it paid annually. Quoting a statement of the PS finance director, they said the mills had a cash and bank balance of Rs12 billion. They revealed that just one month before of the privatization, as many as 80 brand new vehicles were purchased for the mills.

They said that the PS was maintaining a production capacity of 98 per cent and its profit was on the increase every year.

They questioned the justification for the sale of the PS when the factory was functioning well, its workers making no major demand and the mills paying over Rs9 billion per year tax.

They criticised certain political, religious and ethnic organisation which had been keeping a discreet silence over the privatisation of the mills.

The labour leaders lauded the role of labour organisations for raising their voice against its privatisation from day one.

They said that on April 28, 2006, the privatisation commission had announced a package of Rs16.6 billion for Pakistan Steel workers. Considering the package and the cash in hand amounting to Rs10 billion, it could be determined that the mills had actually been sold at a loss of Rs5 billion.

Welcoming the status quo ordered by a full bench of the Supreme Court viz-a-viz the sale of the mills, they demanded withdrawal of the decision to privatise the PS and institution of a corruption case against those involved in the affair.

The labour, political and social organisation, on the occasion, announced the setting up of the ‘Coordination Committee Against Privatization’ to launch a campaign against the PS privatisation.

The meeting also announced the plan to hold a protest demonstration outside the Karachi Press Club on Saturday. It was also decided that the five labour unions of the Pakistan Steel would request the Supreme Court to allow them to appear before it as a party in the case.

Those participated the meeting included Nasir Mansoor of the Labour Education Foundation, Ali Hassan Ishtiraki of the Labour Party of Pakistan, Habib Junaidi of the All Pakistan Trade Unions Organisation, Asad Iqbal Butt of the Human Rights Commission of Pakistan, leader of the opposition in the City Council Karachi Saeed Ghani, Aisha Mir of Shirkat Gah, Adam Malik of the ActionAid Pakistan, Zubaida Birwani of the Pakistan Mahigir Tehrik, Nasir Siddiqui and Mohammad Waseem of the Progressive Workers Union, Steel Mills, Naeemul Haq of the Democratic Mazdoor Union, Pak Steel, Syed Hameedullah of the People Workers Union, Steel Mills, Sattar Butt of the Pakistan Steel Mills Officers Association, Nadeem Jafferi of the PTCL Lions Staff Union, Ghani Zaman Awan of the Karachi Shipyard Labour Union, Munawwar Raza of the KWSB Mazdoor Union, Shaikh Majeed of the Peoples Labour Bureau, Manzoor Razi of the Pakistan Railway Workers Federation, Nawab Ali of the Movement for Labour Rights, Karamat Hussain of the KESC Labour Union, Akhlaq Ahmed, Shafiq Ghouri, Shahla Rizwan, Zahira Akbar and Azra Perveen.—PPI