ISLAMABAD: The government is likely to disburse seven months’ salaries to employees of the Pakistan Steel Mills (PSM) over the next few days. The move comes even as the government has failed to make a strategic decision to curb the ever-increasing losses and liabilities of the country’s largest ‘dead’ industrial unit, which currently stand at a whopping Rs375 billion.
The Ministry of Industries and Production said in a statement on Monday that it had asked the Privatisation Commission to move a summary to the Economic Coordination Committee (ECC) of the cabinet “for payment of seven months’ salaries for the period from December 2015 to June 2016 to the employees of PSM”.
The employees have not been paid salaries since December 2015 after an ECC directive to the management to rationalise the day-to-day essential administrative expenditure and get it approved from the PSM board.
The then management was removed unceremoniously and the board could not meet for months due to a tug of war between the PSM board, its management and the Privatisation Commission. The ministry of industries also informed the Privatisation Commission that the PSM board was now scheduled to meet on Wednesday to consider cost rationalisation.
The Privatisation Commission has been asking the PSM to get rid of contractual and temporary staff, arguing that there was no justification for them being on the payroll of a company that has produced nothing for almost 11 months now.
“We fully understand the difficult situation being faced by thousands of PSM employees today,” said the industries and production secretary Khizar Hayat Gondal. “We are extremely sensitive to the well-being of employees of all state-owned enterprises listed under the privatisation programme as we fully understand the financial and social implications of families not receiving salaries for months,” he said, adding that “we are therefore doing our best to provide the employees maximum protection”.
The government had provided a Rs18.5b bailout package to the PSM when it appointed former chief executive, Zaheer Ahmed Khan, in April 2014 with the commitment to make the firm profitable in nine months. The situation, however, went from bad to worse as gas supply to the facility was critically reduced on June 8 last year, making the entity non-functional.
The government has ordered a forensic audit of the last six months’ operations to ascertain irregularities into the disposal of the Rs9bn worth of inventories and induction of contractual employees when the mill was closed.
On Oct 2, 2015, the Privatisation Commission and PSM’s financial advisers had sought approval for the transaction structure but the Cabinet Committee on Privatisation (CCoP) decided against it and asked the Sindh government to take over the mill. The provincial government has now expressed its inability to do so unless it is offered those incentives that the Privatisation Commission planned to offer private bidders.
Ironically, the ECC, led by Finance Minister Ishaq Dar, did not take a decision on the future of the mill in August 2013 when it was on the verge of closure.
“The present state of PSM is a result of unchecked corruption, inefficiency, over-employment and the government’s lukewarm attitude towards its revival,” said a summary considered by the ECC.
Published in Dawn, April 26th, 2016