Ministry of Production (MoP) has reportedly presented three options to the government to stop the unending bleeding of financial resources in Pakistan Steel Mills (PSM), well informed sources told Business Recorder. "We have proposed to the Prime Minister to privatise PSM or close it in case fresh injection is not possible," the sources added.
The proposed options are as follows: (i) PSM may be privatised but this option cannot be exercised due to Supreme Court decision; (ii) PSM may be closed. This option may have following repercussions; over 15,000 people will become jobless, a law and order situation may arise; the import bill of iron & steel products will rise resulting in an additional burden on foreign exchange reserves; and (iii) PSM may be revitalised.
The sources said, a meeting presided over by the caretaker Prime Minister approved another bailout package of Rs 11 billion, which is yet to be disbursed. The sources said the cash requirements for the year 2013-14 would be to the tune of Rs 13.6 billion. Privatisation Commission has already expressed its intention to commence privatisation process of PSM afresh.
As a first step, Privatisation Commission will withdraw the review petition filed on August 8, 2006 in the Supreme Court against its decision to strike down PSM privatisation. "Taking cognisance of the deteriorating condition of the PSM despite the administrative and financial efforts made and the inherent potential for its revival towards commercial viability, the Board of Privatisation Commission, after thorough deliberations resolved to withdraw the review petition after soliciting the consent of co-petitioners and Law Division," the sources quoted a letter written by the Privatisation Commission.
The Board also directed that the Supreme Court be apprised of the compelling reasons for its withdrawal. Pakistan Steel Mills Corporation (PSMC) was incorporated as a private limited company and commenced its production in 1985. PSMC has a designed capacity of 1.1 MT/annum to manufacture standard grade of steel and can cater to about 20 percent of country's demand if operated on 100 percent capacity utilisation.
Despite the administrative and financial efforts made under the CCoR revival of PSMC is yet far away as PSMC management is finding it extremely difficult to adhere to its proposed business plan(s) primarily due to the insufficient and untimely release of the requisite funds. Notwithstanding bleak financial and administrative conditions, PSMC contains the potential to be revived subject to provision of sufficient funds; competent professional management, independent & entrepreneurial decision making etc.
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