Establishment of EPZ on PSM land by federal govt: Sindh govt concurs with SIFC

ISLAMABAD: The Sindh government has reportedly concurred that Pakistan Steel Mills (PSM) land may be used for establishment of Export Processing Zone by the federal government, well-informed sources told Business Recorder.

The Apex Committee (AC) of Special Investment Facilitation Council (SIFC), sources said, has directed Chief Secretary Sindh to seek requisite approval from Provincial Cabinet for change of purpose of grant/lease. Ministry of Industries and Production is to start work on establishment of EPZ at the allocated land.

“The privatisation of Pakistan Steel was a 4-year long project, involving hundreds of personnel from various departments (Privatization Commission, Transaction Advisors, Ministry of Industries and Production, Pakistan Steel Management and Board). Considerable resources were spent on the project, yet it failed to deliver any result. Apart from the vast financial losses and lost opportunity, this failure also had a negative effect on the morale of the local community and the nation as a whole,” the sources quoted the Board as saying.

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Privatization Commission cited ‘poor economic conditions’ as the main reason for the delay in privatisation however there were many other issues including the condition of the asset when it was put up for sale, structural issues, decision to switch from a Public Private Partnership (PPP) mode to outright sale, ignoring liability settlement, capacity and capability of the Privatization Commission and its Advisors, flaws in the process etc. that need to be reviewed formally and a set of recommendations for changes and reforms need to be produced so that future privatization projects can be executed more successfully. Pakistan Steel has three large institutional creditors, SSGC, Government of Pakistan and National Bank of Pakistan. All three creditors, including the Government of Pakistan are booking mark up on this debt at considerably high rates. Consequently, these debts are adding Rs.20 billion approximately every year in interest charges to the losses of PSM which is close to 70% of the total annual losses of the corporation.

The sources further stated that even after the passage of so many years since the Mills closed down in 2015, these liabilities remain unresolved. Various initiatives to arrive at a negotiated settlement with creditors have been made, but to no avail. Attempts were made to reduce the burden of the interest ranging from writing off of all interest to at least freezing it from the date the Mills were closed in 2015.

PSM now owes GoP Rs.102 billion in principal and Rs.48 billion in interest, National Bank of Pakistan is owed Rs.38 billion in principal and Rs.38 billion in interest and finally SSGC is owed Rs.23 billion in principal and a disputed amount of LPS on this amount. SSGC is asking for Rs 40 billion LPS on base amount of Rs 23 billion.

Copyright Business Recorder, 2024