The govt has been issuing guarantee to the steel mill for Rs2b running finance on yearly rollover since January 2010. PHOTO: FILE
The government has started a probe into alleged involvement of top-ranked officials of Pakistan Steel Mills in corruption and embezzlement including receiving illegal perks and privileges, which have caused losses of billions of rupees to the giant state-owned enterprise and made it sick.
The investigation came following directives from the Economic Coordination Committee (ECC) of the cabinet in a meeting held on July 30, sources say.
The ECC asked the Ministry of Industries and Production to submit in the next meeting a fact sheet on the steel mill, giving details of income and expenditure, losses suffered, staff position and perks and privileges given to employees.
According to the sources, the ECC members expressed concern over the poor financial position of the mill and decided that all facts should be presented to the committee to help it determine the factors that had led to the financial collapse of the mill.
Sources alleged that the previous government had hired thousands of employees in the mill, adding to its financial burden.
In an effort to cover heavy losses suffered by the mill, the new government approved a bailout package of Rs10 billion comprising a term loan of Rs8 billion and running finance on a rollover basis of Rs2 billion. National Bank of Pakistan provided the two facilities to the mill.
The government has been issuing guarantee to the steel mill for Rs2 billion running finance on yearly rollover since January 2010.
In October last year, the ECC extended the guarantee to January 4, 2013. The ECC members underlined the need for continuing the vital running finance facility, arguing that with expiry of the government guarantee, NBP would discontinue the facility. As a consequence, the steel mill will be asked to repay Rs2 billion, which will not be possible to meet at this stage.
The ECC members told the meeting that the Finance Division had endorsed a proposal for extending the guarantee for one year from January 5, 2013. The ECC, which was requested to approve the proposal, considered the summary submitted by the Ministry of Industries and Production for the renewal of government guarantee and gave the go-ahead.
Published in The Express Tribune, August 8th, 2013.
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The corruption in Pakistan is not looking for end.
Abdul qayyum tenure was the best period for psm and now it has been around 2 years that steel mill is in miserable condition and has been supported by bail out packages which were eaten up by corruption. New govt. Apparently seems to have NO feasible plan yet. I have been keeping very close eye on recent initiatives taken by govt, and they are clear indicators that ultimately psm will be privatized and all other efforts like advertisement for ceo and etc are just like beating about the bush. My father works in psm.. and he (and 16000+ employees) hasn't been paid from 2.5 months. Now one can imagine how we are going to celebrate eid?
Privatize steel Mill & PIA. The nation will be relieved of the higher increased taxes and GST they are paying. For God's sake do it.
@Parvez: Is your advice about steel mills...or the country itself as the corruption charges against its administration strting from Ayub Khans team and sons have been much heavier than steel mills and and it is more heavily indebted..if your advice is acted upon where will we go with the heavy debt on yours and mine shoulders...so please reconsider your advice and let us talk of about real issues....to cover which we raise the hue and cry of corruption every other day...i wish some veteran journalist would come out with the real issues that Pakistan Steel has been facing and its solution...but for that he or she will have to work hard on the subject..
Every second month we hear of probe in PSM,PR,PIA where these probe held what are the rest of all previous probe.Our bureaucracy is master in making TA/DAs for going for probes after probes.Best way to put system or governance right is give exemplary punishment to those who did not completed previous probes and those finalized not punished the culprit bureaucrat should dismissed from service because real trouble is with the baboos.
This is a lost cause..................sell it / privatise it / get rid of it , while you still can.