Rs40bn needed to clear dues of 7,884 employees: PSM

Updated Jun 06 2020

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Steel Mills management files report before Supreme Court; seeks decisions on all stay matters within a fortnight. — Reuters/File
Steel Mills management files report before Supreme Court; seeks decisions on all stay matters within a fortnight. — Reuters/File

• Steel Mills management files report before Supreme Court
• Seeks decisions on all stay matters within a fortnight
• Requests for CEO’s appointment to execute ‘rationalisation’ plan

ISLAMABAD: The Pakistan Steel Mills (PSM) management on Friday furnished a report before the Supreme Court, claiming that Rs40 billion would be required to clear liabilities of 7,884 of its 8,884 employees though on its balance sheet, the total loss to the national exchequer was around Rs230 billion.

The PSM management reported that the mills of this sort should not have more than 1,000 employees, asking the SC to order appointment of its CEO for the execution of government’s lay-off plan.

A three-judge Supreme Court bench, headed by Chief Justice Gulzar Ahmed, will take up the report on June 9.

In its report, the PSM management also urged the SC to order that all stay matters against the Steel Mills be decided within a fortnight and all pending litigation for or against the PSM be decided within a month or two. As on March 25, the PSM was engaged in around 671 cases pending before different judicial and quasi-judicial forums.

Besides, the apex court was requested to get Karachi’s Steel Town vacated from ‘illegal’ occupants with the assistance of law enforcement agencies.

The report explained that the PSM’s Board of Human Resource Committee (BHRC) on April 15, 2020 approved a plan to rationalise the Pakistan Steel’s Workforce. The BHRC requested the Ministry of Industries and Production to send a summary to the Economic Coordination Committee (ECC) on behalf of the federal government to make arrangements to pay the retirement and termination dues of its employees.

The debt of employee liabilities of in-service employees related to retirement dues, including provident fund, gratuity and leave encashment, was around Rs20 billion while employee liabilities of already retired people was another Rs20 billion.

Till date, the report explained, approximately Rs30 billion from the date of Steel Mills closure had been paid to its employees for net salaries, excluding the benefits and retirement dues etc. Since 2008, about Rs92 billion out of public money had been paid to the PSM employees, stated the report, which was moved by Advocate Syed Nayyar Abbas Rizvi on behalf of the Steel Mills management.

The Steel Mills, which has been shut down since 2015, had around 15,000 employees at the time of its closure.

Currently, the PSM is in a shutdown state bearing heavy losses, which resulted in accumulated liabilities thus causing huge deficit issues for both government and the organisation itself. The salaries of the employees had been paid by the government as an interest bearing loan resulting in a total accumulated debt of Rs229 billion by the end of 2019, the report said.

The report explained that the expenditure incurred on the monthly salary bill of the employees as well as accrued against different integrated heads of accounts had sky-rocketed and spiralled out of control, though way to late, serious considerations were required to bring a semblance of rationality to the wages and other expenditures of the mills.

The PSM management urged the SC to direct the federal government to immediately appoint CEO of the Steel Mills so that he could oversee the execution of the employees’ rationalisation plan and look after its day-to-day affairs. For more than a year, an official of the Ministry of Industries has the additional charge of PSM’s CEO.

The report mentioned that PSM at its inception had acquired 18,642 acres of land out of which 10,000 acres were retained for the Steel Mills inclusive other industries and 8,000 acres for the Steel Town. The Steel Mills management requested the SC to supervise an operation to get Steel Town vacated from ‘illegal’ occupants with the assistance of the law enforcement agencies.

The PSM management informed the apex court that the Steel Mills had seen many highs and lows since its inauguration in 1973-74, explaining that there had been periods of steady growth, high production and profitability as well.

The Steel Mills had accumulated profits in excess of Rs26.2 billion and operated at over 75 per cent capacity utilisation between 2004 and 2008.

The report requested the apex court to order that all stay matters pending against the PSM be decided within a fortnight, whereas all pending litigation for and against the PSM be decided within one or two months.

As on March 25, 2020 the PSM was involved in around 671 cases pending before different judicial and quasi-judicial forums.

In August 2006, a nine-judge bench of the Supreme Court had reversed the sale of the Steel Mills by holding its privatisation process as an act done in indecent haste.

Published in Dawn, June 6th, 2020