'Pakistan has spent Rs58b on PSM since 2008'

Industrial unit owes Rs22b to SSGC; Rs36.42b to NBP, SC told

ISLAMABAD: The federal government has so far disbursed Rs58 billion to the Pakistan Steel Mills (PSM) through five bailout packages since 2008-09 to ensure survival of the country’s largest industrial unit, said a report compiled by the Ministry of Industries and Production.

The report was submitted to the Supreme Court on Saturday – days after the Economic Coordination Committee (ECC) of the Cabinet – the country’s top forum for economic decision making – decided to terminate all employees of the PSM which is not functioning since 2015.

A three-judge apex court bench, headed by Chief Justice of Pakistan Gulzar Ahmed is also going to take up on June 9 a slew of petitions filed against the ECC decision.

The ministry compiled the report to respond to a query of CJ Gulzar who while heading a three-judge bench on March 12 wondered why the PSM had employed thousands of people and how it was giving salaries to them when the mills was not operating for years.

The bench had also asked the federal government to attend to all PSM affairs immediately.

According to the report, the PSM owes Rs22 billion to the Sui Southern Gas Company –a state owned gas supply company – as principal amount. The National Bank of Pakistan (NBP) – a state owned bank – also extended a loan of Rs36.42 billion to the PSM and the loan is yet to be paid.

The report said the PSM stopped commercial function in 2015 without formulating any human resource plan of its 14,753 employees. The number of PSM employees declined to 8,884 in 2019 wherein 2,233 are officers and 6,651 are workers.

The government of Pakistan pays Rs355 million for monthly net salaries of the PSM employees and it doesn't include the component of leave encashment, provident fund and gratuity.

So far the government has released Rs34.01 billion as net salaries to the PSM employees. The government has also made a payment of Rs1. 266 billion to deceased employees on compassionate grounds to mitigate suffering of families.

It said the government constituted Expert Group in 2018 with an object to invite professional recommendations for the revival of PSM.

The group primarily recommended that the government should establish a Public Private Partnership (PPP) to raising the necessary capital investment and obtaining technical expertise for revival of PSM.

It recommended that government should appoint a technical advisory consortium (TAC) to design an appropriate public-private partnership structure after ensuring a transparent international competitive bidding process to select a preferred bidder and propose and implement liability settlement plan.

The report revealed that a financial adviser has been appointed and working in collaboration with the Privatization Commission. The PSM board of directors on April 16 approved a Human Resource Retrenchment Plan that was presented before the ECC of the Cabinet.

The ECC directed the PSM to resubmit the proposal after reformulating it with consultation of the PSM management so that its scope could be extended to the maximum number of the PSM employees along with disbursement and payment plan.

Later, the PSM with the approval of its board of directors shared revised Human Resource Rationalization Plan to retrench 100 per cent workforce. The ECC on June 3 approved this plan with direction that payment to the PSM employees shall be contingent upon the decision of the apex court.

“The payment calculated by the PSM shall be final once and for all and shall not accrue any further liability against the government of Pakistan and the PSM in this regard,” said the report.