New PSM plan likely to be approved tomorrow

MUSHTAQ GHUMMAN

ISLAMABAD: Privatisation Board headed by Chairman Privatization Commission Muhammad Zubair is to approve new plan to dispose of dysfunctional Pakistan Steel Mills (PSM) on Tuesday.

According to sources, the Board would discuss both options i.e. long term lease and sell off, adding that if the board clears the proposals, then it would be submitted to the Cabinet Committee on Privatisation (CCoP) that is expected to meet on January 20. Finance Minister Senator Ishaq Dar will preside over the CCoP meeting.

Chairman Privatisation Commission Muhammad Zubair recently told the Business Recorder that one potential party was an 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 said that new buyers would be given hire and fire powers.

A 10-member delegation of Mobarakeh Steel Company of Iran recently visited Karachi to examine possibilities of acquiring Pakistan Steel Mills (PSM).

Chinas Boa Steel Group which had expressed keen interest in acquiring PSM now lacks interest due to current strength of employees which is far more than international standards.

According to Muhammad Zubair if the proposals are approved by the CCoP then the process would begin and that would take around 6 to 7 months to finalise the transaction.

According to PC chairman, the present government inherited PSM with an accumulated liability of approximately Rs120 billion and capacity utilisation of almost zero percent in 2013. PSM had been given approximately Rs50 billion in the form of bailout packages between 2008 and 2013.

Given the poor state of the Mill, the present Government continued to support PSM and approved a bailout package amounting Rs18.5 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.

PSM has not been audited for the last three years and it is difficult for auditors to evaluate its actual price.