Chairman Privatisation Commission Muhammad Zubair has reportedly pledged to ensure a Rs 40 billion per annum additional revenue for Pakistan Steel Mills (PSM) through imposition of a Regulatory Duty instead of taking measures to stop leakages, well-informed sources in PC told Business Recorder.
Privatisation Commission had got a financial package of Rs 18.5 billion for a financially-shattered PSM to undertake some reforms designed to improve performance which the entity failed to achieve.
PC is accused of misleading the International Monetary Fund (IMF) that a professional Board of Directors (BoD) has been appointed to restructure PSM as the government has not even appointed the Chairman of the Board yet. The entity is said to be on autopilot and seeking additional bail out packages from the government.
According to sources, PC had opposed additional funding of Rs 8 billion to the PSM from national exchequer a few weeks ago. The ECC was recently informed that PSM was facing serious difficulties in the sale of finished products on account of a growing disparity in the prices of imported steel products, especially from China. Several countries including Turkey, the EU, the USA, Philippines, Vietnam, Malaysia, affected by Chinese exports, have levied special duty up to 40% of the value in order to protect their industry, while other countries have non-tariff barriers.
PC argued that PSM, at present, is running at 50% production capacity and is committed to attain the 77% breakeven production capacity by April 2015. It is the only manufacturer of Hot Rolled (HR) products, which generates 80% of PSM revenues. However, a disparity in tariff is seriously affecting its main sales revenue. It was proposed that a 10% Regulatory Duty may be levied on Hot Rolled (HR), pipes, and all such imported products. This levy will help PSM in its revival and lead to an annual foreign exchange savings of approximately Rs 40 billion.
The committee did not bother to hear the other private sector stakeholders and took the following decision: (i) RD @ 12.5% be levied on import of HRC (PCT 7208) excluding imports of HRC by manufacturers of CRC under Sr. No 41 of SRO 565(1)/2006 dated 5-6-2006, to support local industry; (ii) RD @ 12.5% be levied on the import of tubes & pipes PCT heading 7303, 7304 and 7306 to maintain the existing tariff spread between raw material and end products. This RD shall not be levied on the import of Galvanised Steel Tubes (PCT 7306.9000) and metals shells (PCT Heading 7304.9000) under Sr. No 8 & 51 of SRO 565(I)/2006 dated 5-6-2006 respectively to support local industry; and (iii) RD @ 15% be levied on the import of pipes of PCT Heading 7305 to provide protection to the local industry.
One of the members on the Board of Directors told Business Recorder that the Board has not been taken into confidence on matters relating to PSM.
The sources accused Chief Executive Officer (CEO) PSM, Major General Zaheer Khan (retired) of trying to exonerate the Mill's dealers from the cases under investigation in the National Accountability Bureau (NAB).
Minister for Industries and Production Ghulam Muratza Khan Jatoi is also not in the loop on PSM affairs. He has resumed his responsibilities after more than five months absence because of major differences with the Ministry's bureaucracy.
Prime Minister Nawaz Sharif has reportedly promised the Minister that Ministry's team would be appointed with his (Minister's) approval and those who created hurdles in the past will be shown the door.
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