Govt approves lease of PSM plant and machinery

Steel Mills cutting strength of employees

ISLAMABAD: The government is working on a plan to lease plant and machinery of financially troubled Pakistan Steel Mills (PSM) in a push to revive its operations, which has remained suspended for the past around three years, based on a petroleum concession model.

However, the government has categorically ruled out sale of land of the steel mill - the country’s largest industrial complex set up decades ago with Russian assistance.



The cabinet, in its meeting held in the first week of March, recalled that the Cabinet Committee on Privatisation (CCOP) had about a month ago taken up the proposal of reviving the long-stalled privatisation process of PSM.

During the course of discussions, it was suggested that PSM land would not be sold, but its plant and machinery could be leased to a third party for running them based on a petroleum concession model. The cabinet endorsed the proposal, which had also been decided by the CCOP.

The cabinet also directed the Privatisation Commission to start the process of privatising and restructuring PSM and come up with a comprehensive plan for consideration of the cabinet.

Statistics showed that PSM’s accumulated losses swelled to Rs177.78 billion in 2017. Its liabilities and losses have gone up consistently despite receiving bailouts worth Rs56.45 billion to prop up the industrial behemoth.

The current government also approved a bailout package of Rs18.5 billion in addition to releasing Rs8.5 billion for bearing the cost of salaries of PSM employees.

According to officials, PSM is continuously relieving its daily-wage and contract employees of their duties. The mill, which had 11,989 employees in March 2017, has been virtually closed since June 2015 because of a lack of gas supply, but the government has been releasing salaries for the employees.

Since the mill had exhausted its finished inventory and was not allowed to sell unfinished stock, it has no funds to bear salary expenses of the staff.

The CCOP, in its February huddle, noted that despite massive efforts, there had been no serious engagement on the part of the Sindh government in response to the federal government’s offer to take over control of the mill.



Consequently, the CCOP approved the PSM sell-off plan in an effort to revive the mill and asked the Privatisation Commission to press ahead with the divestment programme.

According to an official, PSM had been operating at average 33% efficiency when Sui Southern Gas Company (SSGC) suddenly cut off gas supply due to accumulating receivables, which led to the closure of the mill. Since then, its losses have been swelling persistently.

The official pointed out that the Ministry of Industries and Production was surprised to know that SSGC was providing gas for K-Electric, which also owed billions of rupees, but the public gas utility stopped supplies to the steel mill when it was headed towards revival.

Published in The Express Tribune, March 18^th, 2018.

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