ISLAMABAD: Pakistan Steel Mills (PSM) owes Rs39.4 billion (28.5%) to the government out of its total liabilities that stand at Rs138 billion, documents show.
Separately, the mill has to pay Rs14 billion in interest on loans of Rs36.3 billion taken from National Bank of Pakistan (NBP).
Ailing steel mill: Govt offers NBP land and SSGC bonds to settle PSM debt
The liabilities and losses of the steel mill have gone up consistently despite Rs56.45 billion worth of bailout packages given by the government to prop up the largest industrial complex of the country, officials say.
The current government has provided a bailout of Rs18.5 billion in addition to releasing Rs8.5 billion to pay salaries of the mill’s employees. According to the officials, accumulated losses of PSM have surged to Rs177.78 billion.
Though the mill is on the privatisation list, the government has failed to sell the unit because of the huge liabilities.
The mill has been virtually closed for the past around one and a half year, but its 12,500 employees and top management are receiving free electricity to a certain extent. The issue was taken up in a meeting of the Economic Coordination Committee (ECC) held on December 15, 2016.
Minister of State for Information Technology and Telecommunication Anusha Rahman pointed out during the deliberations that PSM had demanded Rs75 million for the payment of electricity bills of its staff, which she termed substantial as the mill was not working.
She insisted that the mill management should clarify whether these payments were being made as a result of some contractual obligation or otherwise. Chief financial officer of PSM told the ECC that at present total workforce of the mill stood at 12,500 and payment of their electricity bills was part of the terms and conditions of employment.
The production of steel and its products at PSM has been at a standstill since June 2015 when Sui Southern Gas Company (SSGC) reduced gas pressure to the bare minimum. The mill had to pay Rs19 billion to SSGC for gas supplies. PSM had exhausted its finished inventory, but it was not permitted to sell the unfinished inventory.
Pakistan Steel Mills directed to sell inventory to settle debt
According to an official, PSM was operating at average 33% efficiency when SSGC suddenly cut off gas supply, which led to the closure of the mill. Since then, the mill has not been running and its losses are also going up without check.
The official said the Ministry of Industries and Production was surprised to know that SSGC was providing gas to K-Electric, which also owed billions of rupees, but the gas utility stopped supplies to the steel mill when it was heading towards revival.
Published in The Express Tribune, January 31st, 2017.
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