ISLAMABAD: With half of the Rs18.5 billion bailout package consumed in salaries, the Pakistan Steel Mills has sought another Rs4.5bn to pay gratuity to its retired employees.

This is the crux what PSM Managing Director retired Maj-Gen Zaheer Ahmad told the sub-committee of the Public Accounts Committee which interestingly endorsed the spending on salaries of the employees.

He conceded that the capacity utilisation of PSM stood at 30 per cent against 77pc committed to avail Rs18.5bn bailout package last year. He, however, claimed that the PSM would reach the breakeven by April as its production is expected to reach 77pc of its production capacity.

Maj-Gen Ahmed told the sub-committee that out of the remaining bailout amount raw material was purchased. The gratuity was not included in the bailout package. He said from additional grant of Rs4.5bn the management had planned to upgrade the mills capacity.

He briefed the meeting during scrutiny of an audit paragraph related to ‘irregular utilisation of employees fund’.

Audit officials objected to utilisation of Rs7.5bn by the company from employees fund at a 14-19pc mark-up during 2008-09, calling it a loan. The withdrawal from the said fund continued till Dec 22, 2008, despite a directive of the Board of Directors to immediately re-deposit the withdrawn amount.

The audit officials were of the view that withdrawing the amount for operational use could put the employees hard-earned money at risk since the PSM was incurring massive losses. They pointed out that the money could be invested in a commercial bank at 7pc mark-up but it was loaned to PSM at 14pc which the management consumed to meet operational expenses.

The PSM chief told the committee that out of 19,000 acres of land in Karachi, certain interest groups to whom the mills had allotted the land for specific purposes had started developing housing societies on 1,777 acres. “When the matter was brought to the management’s notice we filed cases in the Sindh High Court which granted stay order.”

The cases are still pending in the SHC.

As per details, a housing society has been planned on 1,377 acres of land. The Sindh government had acquired this land for establishment of universities.

The Pakistan State Oil has acquired 400 acres for setting up a terminal. “The terminal has been established over 200 acres and the rest of the area was being converted into a housing society,” Maj-Gen Ahmed informed the meeting.

He said 200 acres at Port Qasim was being converted into plots but the PSM management obtained a stay order.

Published in Dawn January 27th, 2015

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