Zubair says 2 parties willing to acquire PSM on long-term lease

MUSHTAQ GHUMMAN

ISLAMABAD: Cabinet Committee on Privatisation (CCoP), which is scheduled to meet on January 18, will consider the sell-off of Pakistan Steel Mills (PSM) as two potential buyers are willing to acquire the unit on a very long term lease. This was stated by Chairman Privatisation, Muhammad Zubair at a meeting of National Assembly's Standing Committee on Industries and Production presided over by his younger brother, Asad Umar.

"We have prepared a lease-based transaction structure of PSM. One potential party is Iranian steel company, and their team recently visited Pakistan to assess the worth of the entity and the second party is the Chinese company along with a local concern," he added. New buyers would be given hire and fire powers.

Zubair said that new 'disposed-of', structure of PSM will be considered by Privatisation Board on January 16, 2017 after which it would tabled before the CCoP on January 18, 2017 and if the committee gives the go ahead, the PC will invite Expression of Interests (EoIs) and this process would take 45 days. In reply to a question, he said the government has to face a further financial loss of Rs about 10 billion till the 'disposed-off' process is completed.

According to PC, the present government inherited PSM with an accumulated liability of approximately Rs 120 billion and capacity utilisation of almost zero percent in 2013. PSM had been given approximately Rs 50 billion in the form of bailout packages between 2008-2013.

Given the poor state of the Mill, the present Government continued to support PSM and approved a bailout package amounting to Rs 18.5 billion in April 2014, the objective being to privatise the PSM while in an operational condition. However, PSM failed to achieve the desired capacity targets even after exhausting the entire amount of the bailout package. Despite the failure, the GoP continues to support the PSM employees on humanitarian grounds to the extent of their salaries.

An official statement says that the Standing Committee showed displeasure over the daily losses of Steel Mills and strongly recommended that PSM issues be resolved on a priority basis - either be privatised or sold. PSM suffered provisional losses of Rs 4.09 billion during the first quarter of 2016-16. The accumulated losses upto September 30, 2016 were Rs 167.315 billion whereas total liabilities of the Corporation up to September 30, 2016 reached Rs 177.778 billion.

Rana Muhammad Qasim Noon pointed out that PSM, a national asset, has been closed for the last one and half years, but asking whether it was it possible to make it operational by disposing of its non-core land? Chairman Standing Committee said that the committee visited PSM 18 months ago wherein the same recommendation was made. Chairman PC, Muhammad Zubair said that the first right on PSM's 14500 acres is of Sindh government not the federal government's and PSM has paid the lease money to the provincial government. He said, Sindh government indicated an interest in setting up an Industrial zone to which federal government agreed but later Sindh did not show any interest.

Zubair maintained that "Sindh government could make the mills functional by raising Rs 160 billion through sale of 19,000 acres of land, which the federal government cannot do." Most of the committee members were of the view that PSM is making huge financial losses, the government should dispose it of as early as possible on as-is where-is basis. However, both members of the PTI, Asad Umar and Ms Sajida Begum, were not in favour of privatisation, arguing that the plant can be run efficiently if a professional CEO is appointed. Asad Umar proposed the name of Zaigham Adil Rizvi- former CEO of Tuwairqi Steel Mills Limited (TSML) and sarcastically proposed the name of Hussain Sharif as Chairman of PSM Board.

When Asad Umar, suggested Hussain Nawaz, son of PM Nawaz Sharif, be appointed as PSM chairman for 'he knew much about steel business' to which Muhammad Zubair retorted to Umar: "You are making a political statement." On this, Chairman standing asked him not to dictate him.

Both brothers again used heated words when Zubair addressed to Asad Umer, saying 'don't repeat the same thing again and again'. The latter said: "If you want to leave you can leave but you can't dictate what I can talk about and what I can't talk about. If you don't do right things, I have to go give a solution and you have to listen to me." Qaiser Ahmad Sheikh and Muhammad Zubair argued with each other on PSM's present status. Qaisar Sheikh stated sarcastically that three years earlier Muhammad Zubair had announced that the government would privatise the entity after making it fully functional. Zubair clarified that he had meant to say that the government would get a better price for the mills if they were made fully functional.

Chairman Standing Committee Asad Umar and Chairman Privatisation Commission Muhammad Zubair who are brothers but represent two different political parties argued with each on the strategy to deal with PSM as both have markedly different viewpoints on privatisation.

Asad Umar argued that the government deliberately took the PSM to this state so that people should say "get rid of it". The committee asked Chairman Privatisation Division to share details of the new PSM 'dispose of structure with its members. He replied that he does not have the right to do so now but promised to share it in the next meeting.

Asad Umar also levelled corruption charges on the PSM management, saying "there is ongoing corruption in PSM and the Union is involved in it." He, however, was confronted by the incumbent acting CEO, who asked for one example of corruption since he took the charge.

Asad Umar urged the PSM management to review the cases of those 15 employees who have been served show-cause notices for pelting PSM building with stone and smashing glass. He also took up the issue of payments to the pensioners and was told that the government is likely to approve three months' salaries of employees ie till December 2016 after which it would regularise salaries.

Members who attended the meeting include: Sardar Mansab Ali Dogar, MNA, Qaiser Ahmad Sheikh, MNA, Sahibzada Muhammad Nazeer Sultan, MNA, Dr Shezra Mansab Ali Khan Kharal, MNA, Syed Imran Ahmad Shah, MNA, Ms Sajida Begum, MNA, Mr Iftikhar-ud-Din, MNA,Chaudhry Riaz-ul-Haq, MNA, Rana Muhammad Qasim Noon, MNA, Maulana Muhammad Gohar Shah, MNA, Mr Muhammad Muzammil Qureshi, MNA and Alhaj Shah Jee Gul Afridi, MNA.