ECC refuses to allow PSM to sell Rs5b inventory

PC wanted to dispose of stocks to meet daily expenses of the steel mill

ISLAMABAD: Economic managers of the country have turned down a proposal of the Privatisation Commission (PC) that sought permission for the sale of inventory worth Rs5 billion by the management of Pakistan Steel Mills (PSM) to meet day-to-day expenses of the industrial giant.

According to officials aware of the development, the PC floated two proposals in a meeting of the Economic Coordination Committee (ECC) on June 28.

First, it asked the ECC to release salaries for the employees of PSM amounting to Rs435 million and Rs380 million for February and March 2016 respectively. Second, it proposed that the ECC should allow PSM to sell inventory valuing Rs5 billion to meet daily expenses of the mill that had been lying virtually closed for about a year.

The PC pointed out that PSM had not been running since June 2015 because of reduced gas supply from Sui Southern Gas Company. Since the mill had exhausted its finished inventory and it was not allowed to sell unfinished stocks, it had no funds to bear salary expenses of the employees.

The mill needed Rs190 million to meet its day-to-day expenditures and keep the plant operational at the required heating mode, it said.

After discussions, the ECC allowed release of two-month salaries but stopped short of taking a decision on disposing of the inventory to make finances available.

On Thursday this week, the Cabinet Committee on Privatisation met and approved the PSM privatisation in an effort to revive the industrial behemoth that has about 16,000 employees.

The committee noted that despite massive efforts, there had been no serious engagement on the part of Sindh government in response to the offer of the federal government for acquisition of the steel mill.

Consequently, the committee asked the PC to press ahead with the PSM divestment plan by following the due process.

Meanwhile, Pakistan Peoples Party Senator Saleem Mandviwalla issued a statement on Thursday to protest against what he said was continued forced closure of PSM, Pakistan’s largest industrial asset, since June 2015.

“It is the policy of Pakistan Muslim League-Nawaz to destroy deliberately the national assets of Pakistan like Pakistan Steel Mills, which had been shut down for not paying the gas bill,” he remarked.

He held the government responsible for destroying the steel mill that was running at 40% production capacity in 2013. Instead of reviving the industrial unit, the government closed it forcibly, Mandviwalla said, terming it economic terrorism.

He claimed that the PC did not provide required information to the Sindh government that had written to the commission many a time. “Until the provincial government does not receive the required documents, how can it decide the future of steel mill,” he asked.

He suggested that the federal government should impose regulatory duty on the import of steel products to protect and save the domestic industry. He also asked the PC to allow sale of steel products to PSM in order to run its daily affairs smoothly.

Published in The Express Tribune, July 17^th, 2016.

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