The government may let the Pakistan Steel Mills (PSM) chief executive officer continue his work despite his contract having expired even though there are reservations over his performance. The government is also beginning the process to pay two-month salaries to employees of the country’s largest, but ailing, industrial unit.
The developments come amid growing uncertainty over the fate of PSM, which is in a rather idle state for the last 10 months due to suspension of gas supplies the federal government is in no mood to restore.
The Privatisation Commission (PC) has moved a summary for the approval of Rs858 million to cover two-month salaries to PSM employees for the months of December and January, according to the Commission. The Economic Coordination Committee (ECC) of the Cabinet will formally approve the payment of salaries to the PSM employees. After the payments, the government’s injections into the PSM during the last two years would cross over Rs26 billion.
To sell or not to sell? Steel mill privatisation sceptics meet up
In January this year, the ECC directed the PSM management to share a detailed analysis of its salary bill. After due scrutiny, the monthly wage bill has come down to Rs429 million from over Rs475 million.
The PC is also considering initiating a process to make timely payments of basic salaries to thousands of employees who have been made victims of the poor performance of the top PSM management and indecisiveness on the part of the federal government.
“We fully understand the financial and social implications of families not receiving salaries for months and therefore, are doing our best to provide the employees maximum protection,” said Mohammad Zubair, the Privatisation Commission chairman. He said the Commission would keep playing an active role in pushing and recommending salaries for PSM staff on a regular basis.
Meanwhile, the two-year contract of PSM CEO Major General retired Zaheer Ahmad Khan expired on Wednesday. Khan had been criticised for not playing a proactive role in taking the unit out of its financial crisis despite availing a Rs18.5-billion bailout package.
Officials said a senior federal cabinet member was backing a move to allow the CEO to work even after expiry of his contract. The CEO also met with the Secretary Ministry of Industries. The officials added that the secretary had recommended that the CEO might be allowed to work until the unit is privatised.
However, they said the Industry and Production Minister has reservations over giving an extension to the CEO.
The Express Tribune tried to contact Khan, but he was not available for comments.
PSM conundrum: Govt eyes Rs9.3b bailout without restoring gas supply
A recent report by the Finance Advisors hired for the PSM privatisation also shed some light on the poor performance of the top PSM management.
The way for PSM to achieve three-phased transformation and revitalisation is through privatisation, formation of a new management team and overall optimisation of the supply chain, according to the report. It added the PSM’s “current management team is not suitable to the three-stage transformation and to participate in the market competition”.
The privatisation programme has faced serious setbacks, as recently admitted by Harald Finger, the IMF’s Washington-based mission chief to Pakistan.
In April last year, the government had hired financial advisors who completed the due diligence process in August 2015. However, the privatisation process has been put on hold by the government’s decision in October 2015 to offer the provincial government of Sindh, which hosts PSM, to acquire the company.
There is conspicuous silence on the part of both Sindh and federal governments that are unable to take a decision. Pakistan has assured the IMF that should the provincial government decline the government’s offer, the privatisation process will resume with approval of the transaction structure by May 15, 2016, with finalisation of the transaction by December 2016.
Published in The Express Tribune, April 7th, 2016.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ