Pakistan Steel Mills (PSM) Board of Directors (BoD) on Thursday finalised valuation of 1,500 acres of land at Rs 14 million per acre for establishment of Special Economic Zone (SEZ) near PSM under the aegis of China Pakistan Economic Corridor (CPEC). However, one of the participants told Business Recorder that Board has not approved Rs 14 million per acre price and recommended for revaluation of land price as prevalent price is around Rs 25 million.
The decision was taken by the Board headed by Engineer Jabbar Memon in its meeting held in Islamabad. The Board also directed PSM to finalise deal with NIP for 930 acres of land for industrial park. Well informed sources in Privatisation Commission told Business Recorder that the Ministry of Industries and Production (MoI&P) in its letter of January 26, 2017 stated: "Prime Minister has accorded approval for utilization of 15, 00 acres of PSM land for development land of an industrial park under CPEC". The Ministry had also directed PSM to place the issue before the Board of Directors for final approval.
According to sources in compliance with MoI&P directives, the matter was placed before the BoD wherein it was suggested that 1,508 acres of unutilized land, already declared as investment property, may be leased out for industrial park under CPEC on "as is where is" basis for a period of 60 years @ Rs 40 million per acre and annual ground rent of Rs 10 per square yard per annum with 10 per cent annual increase.
The Board discussed the matter in its 389th and 390th meetings held on April 6, 2017 and May 12, 2017. After detailed discussion, the Board advised PSM management to evaluate 1,508 acres of land already declared as investment property and proposed it as CPEC industrial park from one of the top listed valuators M/s K.G Traders(Pvt.) Limited, approved by State Bank of Pakistan/Pakistan Banks Association to enable PSM to get a fair market value of its land.
M/s K.G Traders(Pvt.) Limited evaluation was as follows: (i) 305 acres - DSIE-III land Rs 16 million; (ii) 428 acres Badal Nala land Rs 13 million; and (iii) 775 acres Badal Nala Rs 14 million per acre. The average per acre land has been evaluated at Rs 14 million. The source said, Board will write to the Prime Minister secretariat and ask that the government should pay the amount upfront so that mills liabilities are cleared.
The issues are as follows: (i) judgment of June 2, 2014 passed by the court of appeal for British Colombia in appeal filed by Sociedade-de-Fomento Industrial Private Limited versus Pakistan Steel Mills; and (ii) Arbitration case between M/s Sesa Goa and Pakistan Steel Mills before the sole arbitrator appointed by ICC and payment of outstanding dues of M/s Concord and handing over of COB-1 to COBP.
Revision of pay scales and grant of ad-hoc relief allowance-2015 of management/ executive grade officers of PSM from July 1, 2015, payment of basic pay scales and promotion of General Manager (PMMC-III) to PEO (PSMC-II) cadre were also on the agenda of the meeting.
According to a press release, the Board after thorough discussion of the agenda items, made following decisions, issued instructions and provided strategic directions to the management. The Board inducted new directors namely, Sardar Ahmed Nawaz Sukhera holding charge of Privatization Commission and Captain Aijaz Ahmed, Additional Secretary -I MOIP. The Board confirmed the minutes of last BoD meeting and deferred the recommendations made by Board Human Resource Committee in regard of promotion and decided to ask management to revisit the entire issue by identifying the essential promotions along with financial impact for reconsideration of the recommendations made by BHRC.
The Board adopted and approved the recommendations made by committee for National Industrial Park affairs and decided to ask Ministry of Industries and Production to resolve this issue by asking NIP to immediately settle the receivables on account of sale of about 600 acres land of 930 acres earlier given by PSM for establishing the industrial park. The Board adopted the recommendations of committee to ask NIP to make payment of land in accordance with the land values prevailing during the relevant period of sale of lands respectively five, six, seven and thirteen million per acre. The last valuation of Rs 13 million per acre is the reference value given by Privatization Commission based on land valuation made for PC for financial of privatization of PSM. The Board also asked management to convey to NIP that in case of delay in making payment, the same will be adjusted for settlement of liabilities of PSM. The Board also adopted the valuation an average of Rs 14 million for about 1500 acres of land for establishment of special economic zone as was desired by the PM Secretariat for establishment of SEZ. The information in relation of cases against PSM in overseas was noted with direction to management to take all necessary measures to protect the interest of PSM.
The other information in relation of important plants like coke oven battery was noted, the compliance with Public Sector Companies (Corporate Governance) Rules 2013 were advised to be rechecked for its compliance with Board Audit & Finance Committee (BAFC). The revision of pay scales and grant of ad hoc relief allowances by government up to recent past were recommended to Finance Ministry through MOIP.
The board also resolved to ask Privatization Commission about the time frame work based strategy of Privatization of PSM and also seek the clear direction so that other options of including rehabilitation can be prudently structured. The board also discussed the recommended reference by NA Standing Committee on Production as to the reasons of its long duration closure adding to the losses on an average of Rs 1.4 billion per month in addition to already existing huge portfolio of liabilities of Rs 170 billion. The Board recommended audit committee to study the figure work as how much loss has incurred since closure of the mill and find out the reasons of long closure for more than 2 years and identify the responsibility in this regard.
The Board directed that committee should bring this report before the Board in next BoD meeting. The Board was of the opinion that it owns ownership of burden of discharge of his duties and role as assigned by Companies Ordinance, therefore all the options of cost cutting, savings, possible working of several units of PSM may constitute the development of comprehensive report and recommendations to Ministry of Industries and Production and to PC. The board on cost cutting measures directed that one more holiday in addition to two weekly holidays be implemented to save expenditures till PSM is back to production and further asked the management to examine all the venues where expenditure can be curtailed.
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