Secretary Privatisation Commission, Sardar Ahmad Nawaz Sukhera revealed Wednesday that the federal government is working on a new integrated module to privatise Pakistan Steel Mills (PSM) which would comprise of settlement of liabilities hovering around Rs 200 billion and making the mill operational.He made these comments at a meeting of National Assembly Standing Committee on Industries and Production headed by Asad Umar. The Ministry of Industries and Production was represented by Minister Ghulam Murtaza Khan Jatoi, Secretary Khizer Hayat Gondal and Additional Secretary Sher Ayub Khan.
On a question whether the earlier proposal of leasing out the mill has been shelved, Secretary Privatisation said that leasing and operationalization are two options however the government has to undertake market valuation maximisation which is a challenge.
When Chairman Standing Committee remarked that the committee is at the same place it was three years ago, Secretary Privatisation said that "I am not sure whether we are sharing our frustration with you or whether the committee is sharing its frustration with us. Collectively, we are all frustrated because PSM is a national asset. We are working on the resolution of PSM liabilities."
On a question raised by the Standing Committee Chair-man, Secretary PC said that the lease agreement proposal had not been submitted to the Economic Co-ordination Committee (ECC) of the Cabinet, adding that presently nothing is ready. He said that according to the GSA, SSGC's outstanding billing is Rs 19 billion but with inclusion of Kibor plus 3 per cent it stands at Rs 29 billion however with variation in interest rates as determined by Ogra it has reached Rs 40 billion.
As Secretary Privatisation he stated that he is personally engaged with SSGC and is trying to settle the issue of liabilities legally and accurately. He cautiously used the word "cruelty" with respect to PSM saying that even when a private entity settles its bad debts with banks, they write-off mark up but in case of SSGC no one is ready to do this.
Former Chairman apprised the committee that when the option of leasing out the mills on a long term agreement was shared with the Finance Minister, who is also Privatisation Minister, he advised that: (i) to make the mill functional and operational so that workforce should be given opportunity to work and (ii) settle its liabilities which are around Rs 120-150 billion.
"We are working on both models at the same time. Previously it was a strategic sale and no work was done on settlement of liabilities. When the government considered lease model, then liabilities were separated which meant a headache for the government. We are integrating both modules to partly make the Mills functional. Financial Advisors are working on it day and night," he added.
Qaiser Ahmad Sheikh who is key supporter of PSM's privatisation as is where is basis for the last three years asked: who is responsible for financial bleeding of about Rs 65 billion (Rs 18 billion per annum)? He added if it was my asset, I could not have slept at night.
"I had claimed three years ago that PSM will not be sold the way it was being handled by the government and I maintain that the situation will remain the same for the next 15 months despite the fact that privatisation is the declared policy of PML(N). Whatever public sector entities are with our government, the situation is more or less the same as with PSM," he added.
Sardar Ahmad Nawaz Sukhera argued that the proposal regarding allocation of 1450 acres of PSM land for China Pakistan Economic Corridor (CPEC) has not been received in the Privatisation Commission. "We have directed PSM to first get its approval from its Board along with its price and then submit it the PC for the CCoP approval," he added.
Secretary PC further stated that he was not aware of the price of the land. However, Qaiser Ahmad Sheikh and Minister for Industries and Production, Ghulam Murtaza Khan Jatoi, stated that the price of land near Port Qasim is around Rs 7 million per acre.
Asad Umar maintained that whatever amount is earned from sale of land, it should be used for retiring liabilities. Engineering Development Board (EDB) claimed that auto assemblers are not charging any premium, and dealers/middlemen are responsible for charging premium on urgent delivery of vehicles.
However, the committee was stunned to hear from EDB official Asim Ayaz that currently no regulation is available to control this money activity. The committee stated that industry cannot accuse investors for this. According to Asad Umar, local car assemblers had proposed that the government should fully charge on second transfer and list of frequent and high volume buyers, but argued that this is not the solution.
"We want specific recommendations as to how this practice can be done away with as customers are not concerned with who is charging this 'bhattha' from them - car assemblers, dealers or investors," he added. According to EDB, on-money on Suzuki Mehran, Bolan and Ravi is Rs 30,000 to Rs 45,000, Suzuki WagonR - Rs 100,000 to Rs 120,000 and Suzuki Ciaz - Rs 90,000. On Money on Toyota Corolla XLI Rs 100,000-120,000 and Toyota GLI Rs 170,000-180,000. On Money on Honda (Civic) is Rs 130,000-180,000 and Honda (City) Rs 90,000-120,000.
The committee discussed sale of sugar on Utility Stores Corporation (USC) and the subsidy claims from the government. Former Chairman PSM, Iskandar Khan said that there was no issue regarding sale of sugar to the USC. He, however, said that the government should not allow establishment of new mills and presently 2 million tons of sugar is available. Chaudhry Riaz-ul-Haq criticised former Chairman PSM, saying that on the one hand incumbent mill owners are increasing their capacity and on the other opposing establishment of new mills. He suggested that the committee should recommend lifting of ban on new sugar mills. Secretary Industries and Production, however, informed the committee that there is no ban on new mills but Punjab is not issuing NOC for this purpose.
After discussion the committee recommended that ban on new sugar mills should be lifted across Pakistan. The committee also directed to provide details of daily wage earners in the USC for more than three months. Presently the strength of daily wage earners is 3,581. The committee also approved 14 new PSDP projects of Ministry of Industries and Production at a total cost of Rs 9.96 billion of which Rs 1.159 are proposed to be allocated in federal budget 2016-17.
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