ISLAMABAD: The government on Thursday approved the release of one-month salary for 12,500 employees of Pakistan Steel Mills (PSM) who have been waiting for the pay for the past three months.
However, it has so far been unable to draw up a viable plan to revive the closed industrial unit.
Instead of resuming operations at the country’s largest industrial concern, the government is planning to sell its land to both public and private-sector investors. Among the options is giving 1,500 acres on lease for setting up an industrial park under the China-Pakistan Economic Corridor (CPEC) for only Rs7 million per acre.
The Economic Coordination Committee (ECC) of the cabinet approved a proposal to disburse Rs380 million for paying the salaries of PSM employees for November 2016, the Ministry of Finance said.
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Now, they may have to wait for many more months to get paid for the remaining three months - December, January and February.
The Privatisation Division had prepared a summary for the release of Rs380 million for the PSM staff. At present, the mill has over 12,500 employees including 281 who are working on daily wage and 191 contractual employees.
Under a proposal of giving PSM on lease for 30 years, the financial advisers have recommended that potential investors may rehire core employees, who are estimated to be around 10,700. The government expects at least half of them to opt for golden handshake.
PSM has been staying closed since June 2015 when Sui Southern Gas Company (SSGC) cut off gas supply for delaying payments, which stood at Rs18 billion at that time.
For the past 21 months, the government has failed to privatise the mill, give it on lease or resume operations by addressing financial and administrative challenges.
In January this year, the government linked PSM’s future with a clean balance sheet. Gross liabilities of the mill stood at Rs206.6 billion in September last year, of which payables to National Bank of Pakistan (NBP) and SSGC amounted to Rs100 billion.
The government has offered non-core land of the mill to NBP to clear the dues of Rs54.8 billion while SSGC has been promised interest-bearing bonds against its receivables of Rs44.5 billion.
The financial advisers hired for PSM privatisation have proposed that the government may settle the liabilities by selling non-core land and utilising the proceeds for clearing remaining liabilities of the bank and mill employees.
SSGC is demanding Rs44.5 billion including Rs25 billion in late payment surcharge. Reports suggest that the government has deliberately destroyed PSM by not getting its gas supply restored over the past 21 months.
PSM board meeting
The board of directors of PSM is going to hold a meeting next week to consider the proposal of giving 1,500 acres of undeveloped land for establishing an industrial park under CPEC, according to officials of the Ministry of Industries and Production.
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Prime Minister Nawaz Sharif has already given the go-ahead and the case has been sent for consideration of the Privatisation Commission and PSM board, according to the ministry.
However, the proposal suggests giving the land for only Rs7 million per acre, which is lower than the price PSM got in similar deals with different organisations. PSM wants the land to be given after development in order to fetch a better price.
At the proposed rate, PSM will get Rs10.5 billion, which will somewhat ease its financial woes.
PSM land has also been taken over by the Sindh government without paying dues. In 2006, the provincial government acquired 1,377 acres in the name of setting up universities. However, later the land was allotted to private parties.
Published in The Express Tribune, March 3rd, 2017.
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