ISLAMABAD: Sindh is willing to ink an agreement with the federal government to transfer the assets of Pakistan Steel Mills (PSM) to the provincial government, said PPP Senator and Chairman Standing Committee on Finance Saleem Mandviwalla on Monday.
He said the Sindh government did receive a reply from the Privatisation Commission (PC) which was thoroughly being examined even though it carried incomplete information.
The Sindh government would submit a comprehensive reply in this regard to the Commission in a month, he said.
According to the reply, PC Financial Adviser of PSM has not prepared a transaction structure of the mill. It also does not provided any tax policy incentive to Sindh government which meant it has no plans to provide any tax incentive to the buyer of mill.
He said the Commission has also not shared any revival plan for the mill.
In the last two-and-a-half years, PC has approved a bailout package of Rs18.5 billion.
However, the PC reply stated: “The federal government wants to privatise the PSM in a running condition.”
Saleem alleged the federal government had no plans for the revival of Steel Mills which was closed since June 10, 2015 on account of unpaid gas bills.
Our reporter from Karachi adds: Sources said the auditors are not ready to clear 2014-15 account of PSM in the present shutdown.
“This has jeopardised the entire privatisation process, given that the government is not providing necessary financial support to PSM for its continued operation till privatisation,” sources added.
This was also one of the concerns shown by the PSM management in its summary which it intended to send to Prime Minister Mian Nawaz Sharif regarding the privatisation of the mill. However, the PSM forwarded the summary to the Privatisation Commission and Ministry of Industries and Production (MoI&P) for it to be handed over to the prime minister.
However, neither the PC nor MoI&P had forwarded the summary for PM.
Meanwhile, the financial advisors have not recommended liquidation of the mill, saying ‘it is not workable’.
PSM believes that only the prime minister can resolve issues like gas restoration from SSGCL for which a small additional funding of Rs 1.2bn is required for payment to the utility company.
Meanwhile a PSM official said the mill had given 1,420 acres of its land to downstream industries project and now 44 engineering industries are functioning on that land.
In 2007, 930 acres were transferred to the National Industrial Park (NIP). The mill has not been paid anything so far in lieu of this land. When the land was transferred to NIP in 2007, its price was Rs10 million per acre and the total price came to Rs10bn.
Some portion of land had been transferred to a leading Japanese bike maker and another industry while the remaining land is still in the possession of NIP.
Currently, the price of land soared to Rs25m per acre and the total price comes to Rs 25bn.
The official said if Steel Mills is paid the total cost in one go, it would be able to overcome its financial crisis.
Published in Dawn, January 19th, 2016