ISLAMABAD: Amid disbursement of Rs1.3 billion by the finance ministry as partial payment of retirement dues to former employees of Pakistan Steel Mills, a group of suppliers, dealers, contractors and pensioners of the PSM have demanded constitution of a committee to investigate ‘deliberate destruction’ of the mills.
A senior government official confirmed to Dawn “Rs1.3bn stand transferred to the PSM on the last working day of the last week in compliance with a court order” as a loan. A May 15 notification seen by Dawn said the President of Pakistan approved the release of Rs1.3bn “for partial payment to the retired employees of PSM as loan in compliance with ECC of the Cabinet decision of April 22, 2020”. The loan will be recoverable in 20 years along with interest with a grace period of five 5 years. For recovery of principal amount, the interest will be chargeable at the prevailing rate for the respective year.
Last week, the ECC returned a Rs18.7bn plan for retrenchment of about 8,000 employees out of remaining staff of over 9,350, with the directions to make effort to bring most of the staff under the severance plan while ensuring that there was no litigations and comeback to the ECC for approval.
The revised retrenchment cost would thus go beyond Rs20bn.
Rs1.3bn transferred as partial payment of dues to retired employees of PSM last week
This has raised concerns among various other stakeholders as they believed the government was preparing to get rid of the mills without settlement of their cumulative dues of over Rs85bn. In a letter to Prime Minister Imran Khan, the PSM Stakeholders Group said they had offered a workable plan to generate Rs150bn revenue to the Federal Board of Revenue (FBR), clear over Rs200bn dues and revive the mills with technical management and tariff rationalisation. However, the ministries and individuals concerned were not even ready to discuss mills revival and settlement of their dues.
The stakeholders group asked the prime minister to form the Techno-Finance Probe Committee to first conclude the reasons behind the deterioration of the mills to closure. It protested that all the affairs and decision making about a mechanical, engineering and industrial complex were being done by ad hoc managements, non-technical and there was no expert available to the ministries of industries, finance and privatisation to see through the problem and suggest a positive way forward.
The group said the ECC ignored PSM and payments to its retired in releasing the Prime Minister’s relief packages to save the private sector industries and workers from the Covid-19 pandemic impact. The PSM and its stakeholders (employees, serving/retired, contractors, dealers & suppliers) are unheard victims who are running from pillar to post for the mills’ revival and payment/settlement of their legitimate funds of more than Rs85bn stuck with the PSM.
It alleged that the government had learnt no lesson from the previous two failed PSM privatisation attempts and adopted the “Public-Private Partnership” roadmap for the mills’ revival which was a further “Road to Financial Disaster” keeping in view increase in losses and payable debts.
“Who were the experts who proposed and approved ‘Public-Private Partnership’ without investigating the factors causing losses to the mills from 2006 to 2020,” questioned the group and observed that the PSM was deliberately destroyed by the previous governments and status quo was maintained by the present government. “This amounts to criminal negligence in matters of public importance.”
The group said the current situation at the PSM was provisional losses of Rs300bn and payable debts liabilities beyond Rs280bn as of April 2020 compared to the Rs10 billion accumulated profit as on June 2008 which was due to lukewarm attitude of the governments to its revival, unchecked corruption and inefficiencies.
It said the PSM was a highly politicised public sector organisation and it was unfortunate that the mills designed capacity of 2.2 million tonnes per annum (MTPA) was never completed, rather than expanding it to 3MTPA. Yet even with sub-economical capacity of 1MTPA, the mills earned operating profit from 1985 to 2008 and registered a net profit in 13 years out of 23 years.
The group said it was unfair to blame the human resource and make it scapegoat because the failure or success was dependent on techno-commercial knowledge, experience, planning, priorities and attitude of the man behind the machine like chairman, chief executive officer (CEO) and chief financial officer (CFO), the board of directors and their appointing authority in the government.
It lamented that there was no member on the PSM board having any knowledge or experience related to an integrated steel plant while the management structure was non-existent, the post of permanent CEO is vacant since April 2016 and the permanent CFO has not been appointed since January 2013 — a cause of fiscal indiscipline. The financial impact cost to the country’s economy and exchequer could be more than $11bn on account of loss to the PSM, loss of revenue to the FBR and additional import bill which has remained unaccounted for as yet.
Published in Dawn, May 18th, 2020