Steel Mills: Fear of SC intervention restrains privatisation

Privatisation Commission board fails to convince members for privatisation of Pakistan Steel Mills.

ISLAMABAD: The Privatisation Commission has had to temporarily shelve the plan for the privatisation of Pakistan Steel Mills (PSM) after it failed to circumvent the Supreme Court’s judgment and was found to be intruding in the mandate of other ministries.

The Privatisation Commission’s board, which met under the chairmanship of Federal Minister for Privatisation Senator Waqar Ahmed Khan, failed to convince stakeholders on either selling almost a fifth of PSM or getting a mandate for the revitalisation of the sinking giant, according to sources who attended the meeting.

Sources added that Khan tried his utmost to convince the board members to go forward with PSM privatisation. However, certain members raised the issue of the Supreme Court’s judgment on the privatisation and its latest position on alleged corruption.

Khan told The Express Tribune that the commission “does not want to sell the shares” and added, “what it wants is a turnaround by enhancing the production capacity from one million tons to seven million tons.”

When asked why he tried to intrude upon the mandate of other ministries, he said that the moment “you go for raising money, the Privatisation Commission comes in.”

Sources said the Privatisation Commission cannot carry out the revitalisation, which is a mandate of the Ministry for Industries and Production. The prime minister has also constituted a ministerial committee - the cabinet committee for restructuring - and Khan was trying to infringe upon the mandate of both the Ministry for Industries and the cabinet’s committee, they added.

Pakistan Steel Mills was a profitable entity during the last regime but due to alleged political appointments at the top, it has been incurring losses worth billions of rupees. The Privatisation Commission has proposed selling a 20 per cent stake to foreign investors and giving them management control.

According to an official handout, “the Privatisation Commission Board discussed the capacity building, plant optimisation and turnaround of the Pakistan Steel Mills.”

The release further states that the board, in consultation with the management of respective entities and the concerned ministries, gave a go-ahead for inviting expressions of interest (EOIs) for the appointment of financial advisers for Pakistan Post Offices, National Power Construction Company, Heavy Electrical Complex (HEC) and the listing of Islamabad Electric Supply Company (Iesco) on the stock exchange for its initial public offering (IPO).

The financial advisers will evaluate these entities and suggest the best possible option for taking the transaction forward keeping in mind their value addition, including corporatisation, revamping, revitalisation, management outsourcing through public-private partnerships and divestment of shares through domestic and international capital markets.

The board also formed various transaction committees for these entities comprising Privatisation Commission board members to monitor the progress for ensuring utmost transparency and satisfaction of all respective stakeholders, said the release.

Khan said that the government was determined to restrict itself to policymaking and not running businesses.

Published in The Express Tribune, December 23^rd, 2010.