PC on Steel Mills privatisation

In a statement issued on Sunday, the Privatisation Commission has said it fully respects and also supports the role of media in Pakistan as a watchdog on socio-political issues and accountability. However, the media’s role also comes with a great need to be responsible and honest, so that the public is provided with accurate and balanced information. The PC therefore fully rejects and strongly objects to the news report titled “Dar rescues PSM from questionable transaction”, which was published on October 3 in Express Tribune, against the privatisation process of Pakistan Steel Mills (PSMC).

The news report states that during the meeting of the Cabinet Committee on Privatisation (CCoP) held on Friday, October 3, 2015, the Minister of Finance, Mr Ishaq Dar picked a major discrepancy in the transaction structure of PSMC. According to the news, the Privatisation Commission was accused of hiding Rs33 billion deferred tax assets from CCoP, which would be given to the buyer. The report also mentions that for this reason alone, the minister decided that the offer of sale would firstly be given to the Government of Sindh with all its assets and liabilities. This is a complete twist of facts.

The facts remain that the transaction structure was discussed comprehensively, as it is done in every transaction structure meeting, as these remain the key decision meetings for the way forward. The presentation given by the financial advisors also included a discussion of PSMC’s liabilities and the tax advantages for the proposed transaction structure. Tax Advantage of more than Rs30 billion was specifically mentioned as the first benefit of proposed structure on slide 11 of the presentation. During this discussion, the minister of finance raised one question about whether the tax advantage should be transferred to the Government of Pakistan or retained with PSMC for the benefit of the prospective buyer to which the financial advisors responded that the benefits should be given to the buyer as an incentive to improve PSMC’s marketing and sale opportunities. Same decision was rendered by the Board of Privatisation Commission a day earlier.

It may also be noted that there are seven qualified chartered accountants on the Board of Privatisation Commission, who also approved the option of retaining the tax advantage with PSMC to the benefit of prospective buyer, making it a unanimous decision by competent financial experts. Hence the statement in the news report that some of the board members opposed to the decision but were voted out is another complete false statement.

Secondly, it should be corrected that no other decision was made by the CCoP other than offering the Government of Sindh the first right to buy, which was based on the Government of Sindh’s own request to the CCoP on previous occasions. Lastly, it should be noted that the CCoP has not rejected the transaction structure but deferred its decision.

The Privatisation Commission is the implementing arm of the Government of Pakistan for its program on privatisation. Ensuring that every stage of the privatisation process is transparent and fair is a critical element of our policy and processes. It is also considered a key measure of success on the completion of a transaction, it concluded.

Published in The Express Tribune, October 5^th, 2015.