The decision has been taken on humanitarian grounds for the PSM employees, and their families. PHOTO: REUTERS
Finance Minister Ishaq Dar gave the anticipatory approval in his capacity as Chairman Economic Coordination Committee (ECC) of the Cabinet, as the formal approval could not be obtained due to his absence from the country.
Dar is currently in Saudi Arabia along with Prime Minister Nawaz Sharif. The formal approval of the ECC will be obtained after his return.
The amount has been approved to pay the salaries for the month of April while the salaries for the month of May and June will be paid later.
“The decision has been taken on humanitarian grounds with a view to enable employees and families of PSM to take part in Eidul fitr festivities,” according to a handout issued by the Ministry of Finance.
The summary to extend the grant was moved by the Privatisation Commission (PC). PSM is on government’s active list of privatisation and under the Privatisation Ordinance, the administrative control of any such entity rests with the Commission.
However, the PC is unable to exercise this right over Pakistan International Airlines.
With the fresh injection, the PML-N government has given over Rs20 billion to the ailing industrial unit in last two years. It had initially approved Rs18.5 billion bailout programme on the promise that the PSM will achieve 77% production capacity from January 2015.
This target was never achieved and the entity’s production capacity has lately dropped to zero after it could not settle gas dues with Sui Southern Gas Company Limited. The SSGC has cut the gas supplies after payables increased to Rs35 billion.
The gas supplies are expected to resume at full pressure from next Wednesday after the PSM management assured the Ministry of Petroleum that it will clear the current gas dues at the end of every month, said PC Chairman Mohammad Zubair while talking to The Express Tribune.
He said the issue of paying past arrears will be settled separately, as the government was in process of privatising the entity in the next six to seven months.
The PSM consumed Rs19 billion worth of gas since March last year. However, its sales were less than half of the total gas bill, which increased the outstanding dues to Rs35 billion.
The PSM has approximately Rs9 billion inventories, which is also a matter of concern.
To review the affairs, a meeting was held this week in Karachi, attended by the financial advisers, hired to privatise the entity and other senior government functionaries.
“We are expecting to finalise the transaction structure of the PSM in the next two weeks”, said Zubair, hoping that the transaction will be completed within this fiscal year.
“So far no decision has been taken on treating liabilities of PSM,” he added. The options were whether to park the PSM liabilities somewhere else or retain them on the books.
The transaction structure is expected to be presented to Cabinet Committee on Privatisation by mid-August and an Expression of Interest (EOI) to invite prospective bidders may be issued in September, the chairman said.
However, Zubair maintained that it was one of the most complex transactions in terms of its financial conditions and the political sensitivities attached with its privatisation.
The International Monetary Fund (IMF) has set December 2015 as deadline for the PSM privatisation but Zubair said the deadline was subject to the prevailing circumstances.
Published in The Express Tribune, July 17th, 2015.
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