ECC seeks details of PSM revenue

Questions payment of salaries since mill's closure; staff cut reduces expenses

ISLAMABAD:

The Economic Coordination Committee (ECC) has questioned the payment of salaries to Pakistan Steel Mills' (PSM) employees and directed the Ministry of Industries and Production to share a plan for future revenue stream at the steel mill.

In a recent meeting, the ECC said that the Ministry of Industries should share details of funds from where PSM employees were being paid as well as the complete future revenue stream of the mill.

During discussions, it was pointed out as to how the mill's staff was being paid salaries up to the end of June 2026. The Ministry of Industries highlighted the background of the case with updates about the retrenchment of 7,892 employees and the remaining 729 employees of PSM.

While approving the proposal, the economic decision-making body directed the Ministry of Industries to provide details of funds which were being used to bear the PSM salary costs and the future revenue flow in next meeting of the committee.

The ministry briefed the ECC that Pakistan Steel Mills was completely owned by the government of Pakistan. It started incurring losses from the year 2008-09 and eventually production was suspended in 2015. Owing to persistent losses, the government had been providing funds in the shape of loans to pay net salaries of PSM employees since 2013. Following the halt to its operation in 2015, the financial status of PSM has worsened and it did not have resources to pay off staff salaries.

The industries' ministry said that in order to reduce salary expenses, the PSM management laid off 7,892 employees out of the total of 8,621 and 729 staff members had been retained, primarily to secure PSM properties for eventual disposal.

Owing to the retrenchment, the salary bill went down from Rs360 million to approximately Rs40 million per month. The PSM management was putting in all efforts to slash losses, which included the handing over of power distribution system for residential colonies to K-Electric and shutting down water and gas supply to the downstream industrial estate and residential colonies. These steps would result in annual savings of Rs6.9 billion.

The ministry further apprised the committee that the Supreme Court of Pakistan in the human rights case No 16985-G of 2018, which was communicated by the Accountant General Pakistan Revenues (AGPR), had made it obligatory for all ministries and departments to ensure the disbursement of monthly salary on the first day of each calendar month.

The salaries for PSM employees needed to be released till the implementation of the Human Resource Retrenchment Plan and in the just-ended fiscal year 2025-26, the federal government had approved a budgetary allocation of Rs3.5 billion for PSM.

Keeping in view the above, the ministry requested the ECC to authorise the Finance Division to approve the payment of a projected net salary of Rs351.73 million for FY 2025-26, which would be disbursed according to the PSM demand for each month from the already approved budgetary allocation of Rs3.5 billion.

The ministry revealed that views on the proposal had been sought from the Finance Division, which had no objection to the proposal contained in para-4 of the summary.

The Ministry of Industries solicited approval of the ECC for the proposal. The Economic Coordination Committee considered the summary titled "Approval for Disbursement of Salary of PSM for Financial Year 2025-2026 (Projected)", submitted by the Ministry of Industries, and approved a technical supplementary grant of Rs351.73 million for the month of June 2026.