Beleaguered PSM resorts to layoffs

Accumulated losses of the country’s biggest industrial unit surge to Rs177.78 billion

ISLAMABAD: As liabilities and accumulated losses continue to pile up, a beleaguered Pakistan Steel Mills (PSM) management has started the layoff process.

According to officials, accumulated losses of the PSM have surged to Rs177.78 billion. The steel mills owes Rs39.4 billion (28.5%) to the government out of its total liabilities that stand at Rs138 billion, documents show.

Separately, it has to pay Rs14 billion mark-up on loans amounting to Rs36.3 billion it had taken from the National Bank of Pakistan (NBP).



The PSM liabilities and losses 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.

The current government has approved a bailout package of Rs18.5 billion in addition to releasing Rs8.5 billion for paying salaries of the sick unit employees.

According to officials, the PSM is continuously relieving its daily-wage and contractual employees. The number of daily-wage employees, which was 250 in December 2016, reduced to 246 in March 2017. Similarly, there were 180 contractual employees in December 2016 and the figure has come down to 174. Regular officers and staff of the PSM which were 12,226 in December 2016 have come down to 11,989 in March 2017.



The Economic Coordination Committee (ECC) has directed the Privatisation Division and the Ministry of Industries and Production to make a detailed briefing to the committee on the human resource position, including regular, contractual and daily-wages employees working the entity with justification in the first week of July 2017.

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

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

The Cabinet Committee on Privatisation had approved the PSM selloff plan in an effort to revive the industrial behemoth.

It noted that despite massive efforts, there had been no serious engagement on the part of the Sindh government in response to the offer of the federal government for the acquisition of the mills. Consequently, the committee asked the PC to press ahead with the PSM divestment plan.

According to an official, the PSM was operating at an average 33% efficiency when the SSGC suddenly cut off the gas supply, which led to the closure of the mills. Since then, it has not been running and its losses are also rising unchecked.

The official said the Ministry of Industries and Production was surprised to know that the SSGC was providing gas to K-Electric, which also owed it billions of rupees, but the gas utility stopped supplies to the steel mills when it was heading towards revival.