ISLAMABAD: With its employees not getting salary for four months and suffering cumulative losses and liabilities of around Rs200 billion, Pakistan Steel Mills is again on the agenda of the Economic Coordination Committee of the cabinet for possible restructuring.

A meeting of the ECC to be held on Thursday will also take up a revised gas pricing formula for a Dharki-based 335MW Liberty Power Project that was shut down about a year ago for having suffered huge losses.

Five months ago, Finance Minister Ishaq Dar had ordered a restructuring plan within a week “because PSM is a national asset”.

Since then, the country’s largest industrial complex has not only suffered losses of more than Rs15bn but has also almost come to a halt – running at less than 2 per cent capacity and its employees have not been paid salary since October.

“If payments are not made to the employees immediately, the PSM could disturb industrial peace and create social unrest,” the Pakistan Steel management is reported to have told the federal government.

“The present state of PSM was due to unchecked corruption, inefficiency, over-employment and government’s lukewarm attitude towards its revival,” the industries and production secretary said in a summary to the ECC. According to him, the PSM suffered an operating loss of Rs26.45bn in 2008-09 and there has been no turnaround since.

On May 16, 2012, the Supreme Court gave three days to the National Accountability Bureau and Federal Investigation Agency to investigate corruption, but according to a senior official nothing happened. He said that all investigations had revolved around Rs26bn losses when Moeen Aftab Shaikh was the PSM chief, but no action was taken on losses of Rs100bn over the past 10 years.

The apex court had ordered the government on April 28, 2011, to appoint a full-time chief executive officer but the corporation has remained headless all along.What is more, the PSM board of directors regularised about 4,800 temporary and daily-wage employees in October 2010 even though the ministry of finance and industries had clearly opposed the move in April 2010 saying there was no provision of this in the federal budget.

In its latest (Jan 8) communiqué to the federal government, the PSM board informed it of a liability of Rs106bn. An official said the government was not informed about Rs100bn loss it had suffered over the past 7 years.

The board has demanded Rs28.6bn to enable it to complete a full production cycle – from procurement of raw material to production, sale of products and cash recoveries – to turn around the organisation leading to its successful privatisation.

The government has also been informed that it did not have coal or iron ore and hence all the plants are lying closed and it does not have money to open letters of credit. This meant no production at all and only 2pc capacity utilisation to keep the plants in a heated position to avoid permanent shutdown.

The ministry of industries had earlier proposed four options –liquidate, shut down, privatise or turn around the PSM. It said it could be turned around with Rs28.5bn to fetch a better price or else it would close down and require Rs106bn to settle liabilities.

Despite having received a bailout package of Rs40.5bn in 2009, the company had suffered a cumulative loss of Rs86.3bn till June 30 last year, while its liabilities piled up to Rs98.6bn.

The absorption of 4,800 daily-wagers added a burden of Rs2bn for the first year and a recurring expenditure of Rs1bn per annum.