PSM land allocated for industrial park under CPEC
ISLAMABAD: Pending a strategic decision on its privatisation, Pakistan Steel Mills (PSM) continues to lose its land — this time to an industrial park to be set up under the China-Pakistan Economic Corridor.
A government official told Dawn that Prime Minister Nawaz Sharif had approved allocation of 1,500 acres of PSM land for the industrial park. The prime minister has “desired that it (matter) may be taken up with the Privatisation Commission and Board of Directors of PSM,” said an order issued by the industries and production ministry.
The ministry said the land was originally meant for investment as per PSM book of accounts and could be utilised for development of an industrial park under the CPEC. “In order to finalise the modalities regarding establishment of the industrial park, the matter may please be placed before the (PSM) board,” the order said. The Privatisation Commission was asked to work out to facilitate the earmarked piece of land for setting up the industrial park.
Interestingly, the PSM board has been incomplete and without a chairman since the PML-N came to power in 2013.
Finance Minister Ishaq Dar had given an undertaking to the International Monetary Fund (IMF) on Aug 19, 2013, that the government would appoint a professional board immediately with inductions from the private sector.
But the board was never reconstituted with 12 members and instead it continued to have two members from the industries and production ministry and one each from the Privatisation Commission and the finance ministry. The only private sector member on the board is a former executive of the PSM.
Partly because of its incompletion, neither the PSM board nor its parent industries and production ministry has so far proposed privatisation of the country’s largest industrial unit, where the rot set in after 2007, taking it from a profit of Rs10.4 billion on June 30, 2008, to a loss of Rs26bn on June 30, 2009.
Also read: Chinese, Iranian companies interested in leasing Pakistan Steel Mills
Then prime minister Yousuf Raza Gilani had ordered sacking of the PSM chief on the floor of the National Assembly over allegations of corruption. He ordered an investigation by the Federal Investigation Agency (FIA).
Nevertheless, the total losses and liabilities of the unit reached Rs200bn by the time the Pakistan Peoples Party government completed its five-year term in 2013.
The PML-N dissolved the PSM board and promised to restructure and revive the mill for ultimate privatisation.
This never happened, but the total losses and liabilities reached Rs415bn by December last year and are still counting.
The PSM has been continuously losing its land to various institutions, private investors and politically backed encroachers. The Sindh Board of Revenue is reported to have reclaimed about 1,770 acres of land from encroachers during the PPP tenure, but leased out a major part to investors at times at a rate as low as Re1 per square yard a year for 99 years, while some other parts were again encroached upon by land mafia and sold out to individuals.
Another 157 acres of land was recently leased out to the Port Qasim Authority for Rs9.3 million per acre, even though the Privatisation Commission had estimated the rate at Rs30m per acre. This piece of land is to be used for handling imported coal for the Sahiwal power project.
The Shaukat Aziz government failed to privatise the PSM in 2005-06 due to intervention by the Supreme Court. However, Mr Aziz approved allocation of about 930 acres of land for the National Industrial Park on lease, but the PSM could not recover the lease amount.
Another 220-acre plot was given to Al Tuwairqi Steel, which pledged it with the National Bank of Pakistan and subsequently left the scene.
Dissatisfied with the FIA investigation, the SC transferred the case to the National Accountability Bureau in May 2012 with a deadline to complete the probe in three months, but its progress is still unknown.
Parliamentary committees, government stakeholders and investigation agencies have been discussing the PSM mismanagement and corruption during all this period.
Interestingly, the PSM was given a target for revival with Rs18.5bn fresh public money to achieve 70 per cent capacity utilisation in about a year, but was deprived of full gas pressure when capacity utilisation reached 65pc with a gap of a few months in June 2015 and has been on zero production since.
Published in Dawn, February 27th, 2017