Selling land only option to save PSM: industries minister

Claims $80m required to reach capacity utilisation of 75%

ISLAMABAD: Amid threats from Pakistan Peoples Party (PPP) to scrap the land lease if Pakistan Steel Mills (PSM) is given to the private sector, Minister for Industries and Production Ghulam Murtaza Khan Jatoi on Friday said the only option to raise cash for the ailing unit was to sell the industrial unit’s land.

His remarks come after the Privatisation Commission, in its transaction structure, had ruled out land being handed over to the buyer.

Jatoi, who said the amount required to reach 75% capacity utilisation was $80 million, was briefing the Senate Standing Committee on Industries and Production headed by Senator Hadayat Ullah.

Senator Taj Haider has already warned the government of Sindh scrapping the land lease if PSM is handed over to the private sector. It was also clarified that only 4,000 acres, out of a total of 24,000, will be offered with the plant.

He also proposed that the government should impose 10% import duty on steel products to bring PSM out of its crisis. The government does not support the proposal.

Jatoi also said that contrary to popular belief, PSM can only reach 50% capacity utilisation with the current machinery.

“Government has given Rs18.5 billion to PSM on the CEO’s promise that he will achieve 77% utilisation. But he failed to deliver because the machinery is not in a condition to achieve the target,” Jatoi said. “In the present condition, the plant can achieve 45 or 50% and PSM can only be revived with sale of land.”

The minister added that the Chinese team revealed that a unit was being run in China that had a capacity of 3 million tons with 4,000 employees. The PSM, on the other hand, boasts a capacity of 1 million tons, but has 15,000 people on the payroll. Talking about the proposed privatisation, Senator Haider said the government has offered to sell the PSM to the Sindh government but did not reveal the terms of the financial package.

Secretary Industries and Production, Arif Azim said that the government had not offered PSM to the private sector so far, adding that the current road shows are in progress and privatisation is in its initial stage. The minister for industries said the Sindh government will be given the same offer as the private sector.

Plot allotment

The committee was also informed that the PSM management has spent Rs1.16 billion on allotting plots to employees in Gulshan-e-Hadeed.  The committee expressed displeasure and directed that PSM should pay this amount as swiftly as possible. The committee also sought record of illegal and commercial construction on residential plots.

Published in The Express Tribune, October 17^th, 2015.

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