Minister for Industries and Production Hammad Azhar on Saturday criticised the PPP for turning the Pakistan Steel Mills (PSM) "from a profit-making entity with billions in [its] bank account to a heavy loss-making and bankrupt entity" after the party's chairperson Bilawal Bhutto-Zardari lashed out at the PTI government for sacking over 4,500 PSM employees.
According to reports, more than 4,500 employees of the Pakistan Steel Mills were fired on Friday after an emergency meeting chaired by the organisation's chief executive officer.
The management of the firm confirmed to The News that officials belonging to category 2,3, and 4 pay groups had been dismissed from their jobs and that dismissal letters had been sent via post to all those impacted.
The federal government had already approved the retrenchment of all the 9,350 remaining employees of the PSM with a one-time severance cost of about Rs20 billion in June.
Reacting to Friday's reported development, Bilawal termed the Centre's move "heartless" and vowed that his party would "return each and everyone back to work".
"The land of this historical industrial asset belongs to the people of Sindh, we will not let the PTI get away with this economic murder," he tweeted. "Sack Imran not workers," he further said.
Responding to Bilawal's tweet, Azhar said he wanted to "remind everyone that it was during the PPP [government's] tenure that the PSM went from a profit-making entity with billions in [its] bank account to a heavy loss-making and bankrupt entity".
"Capacity was taken down to 40 per cent and then PML-N shut it down in 2015," the minister said.
Addressing a press conference later in the day, Azhar confirmed the employees' termination, saying the PSM was a story of "corruption, mismanagement, overstaffing and recruitment", adding that "tough decisions" would have to be taken to correct the situation.
"PSM was a profit-making organisation in 2008 and had Rs8bn in its bank accounts and debts were nearly paid but in PPP's tenure this profit-making organisation went into great loss and its capacity was also reduced. More than Rs100bn losses were accrued.
"In the PML-N government, the capacity was further reduced to 20pc, then six per cent and it was eventually shut down in 2015 in the PML-N's [tenure]. More than five years have passed since it was shut down but the government of Pakistan has paid Rs35bn to employees of a closed mill in the form of salaries and more than Rs20bn in retirement dues."
The mill accrued losses of Rs15-20bn annually, he added.
He disclosed that the PTI government had last month paid retirement dues worth Rs 24bn to PSM employees which had been withheld since 2013.
In this situation, our government decided to include a private investor and terminate the employees who were hired either at the wrong time or on the wrong skillset to solve the problem of overstaffing, he said.
He said the government would pay around Rs3m to each of the 4,500 employees that were being terminated which was in accordance to the law and the PSM Services Act.
"I know a lot of politics will be done on this matter by people in whose tenures, there were scandals and [the PSM] went into loss, and it was closed. But we need to understand that we will pay Rs20-30m to each of these 9,500 people but if we don't take this decision, we will have to put billions of rupees more in this mill."
The minister reasoned that if the government had spent the money on development projects such as building schools and hospitals, instead of putting it in the PSM, millions of people would have gotten employment.
He said that losses of state-owned enterprises had exceeded Rs2,000bn which was more than the country's annual defence budget. "If we want to take the economy forward, we will have to take these decisions. I believe this was the right decision on which implementation has started."
The PSM has 19,000 acres of land, of which 1,200-1,300 acres will be leased out to run the mill's operations. "This will be done in the most transparent manner as per privatisation rules," he said.
He added that efforts would be made to involve an "international player" in partnership with the government for the mill's operation. Management control would be handed over to the private party, he said.
Privatisation of PSM
In June, the Economic Coordination Committee (ECC) of the cabinet had given a "go-ahead to a 'full and final' human resource rationalisation plan for the PSM employees in accordance with the judgements and observations of the Supreme Court of Pakistan and other courts hearing the cases involving the PSM".
Under the decision, the government would retrench 100pc workforce that stood at 9,350 back then. Out of the total, only 250 employees would be retained for a period of 120 days for the execution of the plan and other necessary work. All other employees would be issued termination notices. The financial impact of the plan worked out at Rs19.657bn was to be released in a single tranche to pay gratuity and provident funds.
In addition to this, one month salary would be paid to PSM employees from the approved supplementary grant on account of salaries. Thus, the average payment per employee would come to Rs2.3 million.
In-Depth: The demise of Pakistan Steel Mills
Last week, Adviser to the Prime Minister on Institutional Reforms Dr Ishrat Husain had announced the division of the Steel Mills land into two parts as well as a scheme to lay off its existing employees by offering them salaries for two to three years.
"The PSM has been non-functional since 2015, but salaries and other packages are being paid by the government," he said, adding: "We will establish a company to run the Steel Mills with private sector and 1,200 acres of its land will remain under the administrative control of PSM. We expect that the operating capacity of Steel Mills will enhance up to three million tonnes per annum against one million tonnes," Husain said.
He said that 19,000 acres of other purpose land of the PSM would remain under government control.