White elephant: ECC fails to decide fate of Steel Mills

Management, ministries asked to either liquidate or privatise PSM or agree on a bailout package.


Shahbaz Rana August 23, 2013
Pakistan Steel Mills. PHOTO: FILE

ISLAMABAD:


The government couldn’t decide whether to sell the Pakistan Steel Mills (PSM) or to pump more money into the white elephant for fear of backlash from the main opposition Pakistan Peoples Party (PPP).


The Economic Coordination Committee – the top decision-making body on economic matters – failed to take a decision after the PPP threatened to mobilise a huge protest if the PSM was sold. The PPP has been blamed for the bankruptcy of the once profitable enterprise.

The ECC gave the ministries of finance and industries and the PSM management three options and 72 hours to agree on one of them. The options are 1.) to liquidate the PSM, 2.) to give it a Rs27 billion bailout package, 3.) or to privatise the enterprise.

According to officials, the finance ministry has refused to pump more money into the PSM, arguing that over Rs50 billion given to the enterprise over the last 12 years couldn’t make a difference. The ECC directed the industries ministry to seek the Privatisation Commission’s advice on the matter.



The Russians have recently shown interest in the PSM and want to turn it around according to their model, which may not be acceptable to political parties, according to Board of Investment officials.

Apart from that, the ECC also decided to lift a ban on gold import from next month and approved a new import policy, carrying stringent conditions aimed at discouraging the commodity’s smuggling to India. The ban was imposed after the ECC witnessed an abnormal increase in gold imports.

According to the new policy, which will be effective September 1, the quantity of gold importable by a single party has been capped at 25kg on a revolving basis. The importer has been made responsible to export the imported gold in the form of value-added gold jewellery within four months, as against the previous limit of six months.

It will be mandatory to have a contract notarized from the foreign country’s legal authorities and then the same would also need to be duly attested by Pakistan’s mission in that country. Earlier, the foreign buyers entrusted and sent gold to Pakistani exporters on the basis of a plain paper contract.

The government has also increased the ratio of value-addition in all gold products. The government has also banned selling of gold, imported under the scheme, in the domestic market. In case of violation, the importers will face penalties.

Finance Minister Senator Ishaq Dar, who chaired the ECC meeting, said the new scheme for re-export of gold would not be applicable to those who have imported gold or are authorised to import under the existing scheme.

Published in The Express Tribune, August 23rd, 2013.

COMMENTS (7)

abdussamad | 10 years ago | Reply

@AliKuliKhan: LOL yeah. Get clearance from him before doing anything.

The decision to allow gold imports from next month is going to hit the rupee hard.

Rabbani | 10 years ago | Reply

PSM will be better off in hands of private investors, who would run the enterprise on optimum level to increase its productivity. If full-scale privatization is not possible now, government should atleast convert PSM into a corporation and list its shares in national stock exchanges.

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