PSM expenditure since its closure: ECC directs FD to submit details of cost borne by govt

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has directed the Finance Division to submit details regarding total cost borne by the federal government to meet expenditure of Pakistan Steel Mills (PSM) since its closure, official sources told Business Recorder.

Industries and Production Division has informed the ECC that PSM is a wholly owned Government entity, and has been incurring losses since year 2008-09 with accumulated losses of Rs. 206.068 billion till June 30, 2022. Owing to persistent losses the government had been providing funds for the net salaries of PSM’s employees since 2013.

The production operations of PSM are suspended since June, 2015. Therefore, the entity does not have adequate financial resources to pay for the salaries of its employees.

PSM employees: ECC may approve Rs1.244bn for payment of salaries

In the wake of privatisation process of PSM, the Federal Government decided to retrench the PSM’s employees. So far, 5,679 employees have been retrenched and approximately 3,100 employees are working. Due to retrenchment of the employees, the salary bill of employees declined from Rs. 350 million per month in 2020-21 to around Rs. 104 million per month at present.

Moreover, PSM filed a petition in the Labour Court Karachi for retrenchment of the remaining 50% workforce, as according to the clause No. 11-A of Pakistan Industrial and Commercial Employment (Standing Orders Ordinance, 1958) no employer shall “terminate the employment of more than 50% of the workmen or close down the whole of the establishment without prior permission of the Labour Court”.

Industries and Production Division further noted that as per orders of Supreme Court of Pakistan of May 10, 2018 it became obligatory on all Ministries/Divisions and Departments to ensure disbursement of monthly salary on 1st day of each calendar month.

The salary for the PSM employees was, therefore, to be released till implementation of complete Human Resource Retrenchment Plan. In the Current Fiscal Year 2023-2024, the Federal Government had approved budgetary allocation of Rs. 10 billion for PSM.

The forum was further apprised that the Finance Division had endorsed the proposed payment of salary to employees of the PSM. Ministry of Planning, Development & Special Initiatives observed that PSM had filed a case in Labour Court, Karachi for retrenchment of the remaining 50% workforce of PSM. There was a need to actively pursue said case to have decision of the court.

After detailed deliberations, the ECC authorized Finance Division to approve the payment of projected net salary for first six months of the Financial Year 2023-2024, to be disbursed according to the salary demand of PSM for every month from the already approved budgetary allocation of Rs. 10 billion.

The ECC further directed Finance Division to submit details regarding total cost borne by the Federal Government to meet expenditure of PSM since its closure. There are reports that Privatisation Commission has expedited work on revival plan/privatisation of PSM during the incumbent Caretaker government.

Copyright Business Recorder, 2023