ISLAMABAD: The government is considering yet another bailout package of Rs9.3 billion for the ailing Pakistan Steel Mills (PSM) even though it has failed to restore its gas supplies, which has now become a pre-condition for selling the country’s largest industrial unit as a ‘going concern’.
However, more than the issue of giving the second bailout, the bigger concern is now how to restore gas supplies. These remain virtually suspended since early June last year due to the Sui Southern Gas Company’s (SSGC) outstanding dues of Rs36 billion.
Power ministry opposes gas supply to Engro plant
In a November 30 letter, PSM Chief Executive Officer (CEO) General (retd) Zaheer Ahmad sought the prime minister’s help to resolve the issue but to no avail.
“The auditors are not completing audit of year 2014-15 of the PSM as a ‘going concern’ since the plant is not in operation,” said the CEO’s letter to the PM’s military secretary. If the auditors declare the steel mill not a going concern, PSM would be a junkyard that will significantly reduce its price.
The official summaries reveal how inefficiently the government ministries were handling the PSM issue. The petroleum ministry is not ready to restore gas without recovering gas dues.
The Privatisation Commission and the industries ministry are unhappy with the CEO who sold Rs3.3 billion inventories but did not clear the SSGC dues. Out of Rs3.3 billion less than Rs35 million were paid to SSGC, said the officials of the industries ministry.
In April 2014, the Economic Coordination Committee (ECC) of the Cabinet had approved Rs18.5 billion bailout package. Since then, it also approved an additional Rs5 billion for paying salaries after the approval of the package. Under the deal, the management was required to increase the capacity utilisation from 5% to 77% by June 2015. But it failed.
Any decision whether to give another bailout package and restore the gas at full pressure can only be taken if an official summary either reaches the prime minister’s office or is taken up at the forum of the ECC, said the officials.
The hurdle is the finance ministry that is sitting on a summary of industries and production ministry, which requested Rs9.2 billion to keep the PSM running.
Gas supply: Petroleum minister stresses on increased production
The Privatisation Commission has opposed any fresh bailout package and instead has recommended the government to restore the gas supplies. If the gas supplies are restored, the PSM can convert Rs5 billion inventory into finished goods, according to Privatisation Commission’s comments on the Ministry of Industries summary.
Published in The Express Tribune, January 31st, 2016.
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ