ISLAMABAD: The government plans to terminate the services of over 8,000 remaining staff of the Pakistan Steel Mills (PSM) — the country’s largest but closed industrial unit — through a compensation package of about Rs19 billion.
A meeting on Wednesday of the Economic Coordination Committee (ECC) of the cabinet presided over by Prime Minister’s Adviser on Finance and Revenue Dr Abdul Hafeez Shaikh had an initial discussion on the “Human Resource Rationalisation Plan” for PSM, worth Rs18.74bn.
The ECC also took up a proposal of the petroleum ministry for hedging of oil imports, but the summary was withdrawn by the ministry.
The ministry of industries and production has come up with the plan for rationalisation of the workforce of PSM costing Rs18.74bn, which is to be paid in retirement and termination dues to over 8,000 of the 9,000 employees.
The committee discussed the proposal in considerable detail and asked the industries ministry to resubmit the proposal after reformulating it in consultation with the PSM management so that its scope could be extended to the maximum number of PSM employees.
Rs19bn compensation package to be offered to workers
The failure of the country’s “mother industry is an unending story of unchecked corruption, inefficiency, and over-employment”, according to an earlier summary submitted to the ECC. The PSM has been closed since June 2015, when its gas supply was drastically curtailed for non-payment of bills that were significantly lower than the default of a private sector entity at the same time.
The stakeholders of the PSM have been demanding of the federal government to order an in-depth and 15-year audit of the mills’ performance that led to its closure and loss of more than 2,000 acres of its precious land to land grabbers.
The total losses and liabilities of the mills have gone beyond Rs500bn, besides about $2.5bn in foreign exchange loss per annum to the country because of import of steel that should have been produced at the PSM.
The governments have been paying about Rs270 million per month in salaries to the PSM employees from the federal budget, but have made no attempt to revive it. The final dues of about 4,000 employees, who retired since 2013, have not been paid and about 650 pensioners out of them have since died but their families have been waiting for their dues.
The Pak-China Investment Bank had declared in 2015 that with an initial investment of $289m (about Rs29bn), provision of uninterrupted electricity supply and a new management, the PSM had the potential of becoming a profitable enterprise given its ideal location, market and facilities.
Not only this, the country’s largest industrial complex could generate the funds required for expanding its production capacity to three million tonnes, the bank said and proposed a development and expansion plan with a capital investment of $288.77m in the first phase, $300.4m in the second and $296.62m in the third. The total investment required was $885.8m, or approximately Rs100bn.
On the basis of field surveys, extensive data and in-depth discussions, the financial advisers had concluded that the PSM was a steel enterprise which had a high starting point, complete process chain and the advantages of resource acquisition and regional market.
The advisers were of the view that because it was located near a city with over 20m population and close to the 50,000-tonne bulk cargo wharf relying on raw material and fuels import, the PSM owned rare logistic cost advantages. With the expansion of production capacity in future, its harbour could also be used to ship products to the rest of the market.
Published in Dawn, May 14th, 2020