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PSM suffers Rs70.94bn loss

October 17, 2012

ISLAMABAD, Oct 16: The Senate was informed on Tuesday that Pakistan Steel Mills (PSM) had suffered a total loss of more than Rs70.94 billion during the past four years.

Minister for Production Anwar Ali Cheema, while attributing various reasons for the losses including decrease in sales, told the upper house that the loss faced by PSM in the last fiscal year 2011-12 was Rs21.43 billion.

Giving an update on the regularisation of employees, he said: “Since the commencement of incumbent government from March 25, 2008, services of 5,674 employees have been regularised who were earlier daily wagers or contract workers. During the same time, 308 contractual and 463 daily wager employees have also been inducted in PSM.”

“Daily wages appointments were made for purely temporary/casual nature on work requirement basis. The services of contract and daily wagers were regularised in accordance with the government policy,” the minister said.

“The production of PSM was at 19 per cent of its total capacity in the year 2011-12 while it utilised 36 percent of its production capacity in 2010-11. Production capacity was 40 percent in 2009-10,” he informed the house.

The Senate was informed that PSM faced loss of Rs12.43 billion in 2010-11, Rs11.56 billion in 2009-10 and Steel Mills faced loss of Rs25.52 billion in the year 2008-09.

“The main reasons for huge losses are decrease in sales, high prices of imported raw material, low production and inventory valuation at Net Realisation Value (NRV).”

“The PSM board of directors has approved the capacity utilisation of 63 percent for the year 2012-13 and a committee has been constituted to set out the Key Performance Indicators (KPIs) for Pakistan Steel Mills and further implementation and monitoring of the (KPIs),” the upper house was informed.

Meanwhile, Minister for Industries Ch. Pervez Ellahi informed Senate that 1,579 industrial units have been closed down in the country during the last five year. Responding to queries, the minister highlighted that the main reasons for non-performance of sick industries was high cost of production and energy shortage.

However, the minister also acknowledged that inefficiency was also a key reason for the low productivity of sick units.

“Sick units are either closed down or not producing at optimum capacity due to frequent outages of electricity and gas. The other reasons are high cost of capital, poor technology and poor productivity. Also ownership disputes and owner specific financial constraints contribute to the problem,” he said.

The Senate was informed that among the 1,579 sick units, 115 are in Punjab, 700 in Sindh, 688 in Khyber Pukhtunkhwa, 29 in Balochistan 29 and 47 in EPZA.

The minister said that measures taken by the government for the revival of sick units in KP and FATA include writing-off loans to all small and medium enterprises. He further informed that the State Bank had already granted approval in this regard.

The minister said that measures were being taken to augment energy supplies by enhancing electricity/gas production in order to meet the increasing demand of energy. “Nuclear energy production would be enhanced through indigenisation of the nuclear power technology,” Ellahi added.

However, the minister did not specify the time frame for the completion of these measures or the measures being taken to increase energy supplies.