In September, the government released Rs1.5b from its Rs3b bailout package for the Steel Mills, out of which Rs800 million was immediately paid as salaries to the staff. PHOTO: FILE
According to the statement from the prime minister’s office, chartered accountant Asad Ali Khan, businessmen Jabbar Memon Shah, human resource manager M Saad Hussain, corporate professional Sohail Ahmed and banker Ahmed Alman Aslam were approved for the board.
The government, in a massive privatisation drive, had decided to sell 26% or more shares of various state-owned entities, including Pakistan Steel Mills and Pakistan Railways.
Overall, 31 enterprises, worth billions of dollars and belonging to sectors such as oil and gas, banking and finance, power, industries and real estate, will be privatised and restructured. Last week, the Cabinet Committee on Privatization (CCOP) approved the privatisation and restructuring strategy for these enterprises.
The sale is necessary to fulfil a key condition of the International Monetary Fund’s extended fund facility worth $6.7 billion for the country.
The government approved giving Pakistan Steel Mills under the control of private sector and reducing its shareholding.
The premier last month said the Pakistan Muslim League – Nawaz government was pumping in Rs500 billion every year into the “black hole of institutional losses” and mentioned the examples of Pakistan International Airlines, Pakistan Steel Mills and the Railways. He said one of the main reasons for the losses was excess staff.
Published in The Express Tribune, October 10th, 2013.
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@MALIK:
Sounds great but that's not how corporations work. Shareholders vote for the Board of Directors who in turn select/hire the CEO - in short if you own the majority of shares you control the management of the Company. Further - there is no such thing as a "free lunch" if your asking a company to spend money to buy shares and run the company then the profits of their investment/actions should accrue to them - not the govt which is sitting around doing nothing. You want the best sales price then sell the company and tax the profit.
PSM is also plagued by the obsolete technology and higher ( more than the industry) fixed costs the government has to introduce some sort of golden hand shake/ early separation scheme for the employee to trim the work force failing which there won't be any buyer for the minority stake with management control. New strategic partner/s in PSM shall have to pump in lot of fund to modernize it technically to reach the break even.
26% with management control is the best way forward. Not only will the government retain a majority stake but will also be able to derive profits. All the private management has to do is to downsize the employee base for these organizations, stop free loading and half the issues will be resolved.
S.Nasir Mehdi Did you forget who made the Steel Mills in Pakistan? It was Bhutto himself!
Nice move. Govt of corrupt should not run money maker institutions. Pakistan govt should shed all these bankrupt institutions (which are bankrupt because of paying party workers for loyalty)
Privatization sounds great - but what businessman would purchase a minority interest in a chronic loser like Pakistan Steel Mills? Further - if Pakistan Steel Mills can't make money when the govt has subsidized energy how do you think it will perform when they have to pay an equitable amt for energy? Lastly - what businessman would consider buying an energy intensive business like Steel in a country which has an obvious energy shortage? Long and short - wouldn't surprise me if the best alternative is to shut it down and buy steel elsewhere.