Senate Standing Committee on Industries and Production will quiz the management of Pakistan Steel Mills (PSM) in Karachi on November 25 on dismal performance even after utilising Rs 18.5 billion bailout package. The committee has also sought the assistance and guidance of Senator Lieutenant General Abdul Qayyum (retired), the former chairman of PSM, during whose tenure the Mills earned a profit, to grill the incumbent management which failed to fulfill commitment made with the federal government. Former Chairman PSM will also been given TA / DA for attending the meeting.
PSM''s accumulative losses stood at Rs 350 billion of which Rs 160 billion are unadulterated losses whereas Rs 190 billion are debts as on October 30 2015 as compared to Rs 223 billion losses till February 2014, indicating a wastage of Rs 127 billion of national exchequer. Finance Minister, Senator Ishaq Dar approved the bailout package of Rs 18.6 billion in April 2015 on assurance from the incumbent CEO of achieving 77 per cent capacity. Minister and Industries and Production, Ghulam Mustafa Jatoi argues that PSM cannot achieve more than 45-50 per cent CAPU.
The incumbent PSM management, which is expected to be removed very soon, maintains that the government should run the plant as a going concern, adding that in case of closure, the government would bear the financial burden of Rs 500 million for salaries of employees etc. Federal government''s key decision makers are furious at the management; some top officials of PSM are also retiring in a few months.
According to sources, the committee headed by Senator Hadayatullah, in its previous meeting, had directed the management to sell its inventory and pay salaries to the employees. However, the management did not implement the decision in spirit. As per approved plan, Capacity Utilisation (CAPU) targets starting two months after the release of funds in May 2014 were 20 per cent in July 2014 reaching 77 per cent break-even in July ie January 2015. PSM argues that the loss is associated with CAPU, a caution clause in ECC approval catered for delay in release of funds (and hence not achieving required CAPU) requiring an injection of additional funds@ RS 1.4 billion for each month''s delay, keeping criticality of gas supply and NBP L/C to bailout, ECC approved freezing payment of markup and principal amount of NBP and SSGC for two years which will then be rescheduled for 10 years while surcharge of SSGC was to be waived off; the latter also approved in ECC of April 25, 2012. Insiders argue that the inventory of slabs amounting to Rs 2.5 billion is available with the mills in addition to HR of Rs 500 million, scrap Rs 500 million, molten iron, etc, which implies that the management can pay six months'' salaries to employees. But the management is hiding facts from the government and pleading for more funds to pay salaries and other expenditure. The management has claimed time and again that the mill had achieved 65 per cent CAPU but the PSM''s official documents reveal that average CAPU was 20 percent in July 2014 to June 2015. The documents show that PSM achieved CAPU of 7 per cent in July 2014, followed by 12 per cent in August, 2014, 21 per cent CAPU in September 2014, 2 per cent in October, 18 per cent in November 27 per cent in December, 2014, 24 per cent in January 2015, 19 per cent in February, 41 per cent in March, 32 per cent in April, 23 per cent in May and 8 per cent in June 2015.
Comments
Comments are closed.