ISLAMABAD: The federal government has spent about Rs 50 billion on Pakistan Steel Mills (PSM) since it shut down its operations in mid of 2015 on salaries, supply of gas and other heads without any output, well-informed sources told Business Recorder.
The government is extending Rs 3.5 billion per annum to PSM, of which salary bill is about 400 million per month since Mills’ closure which has now declined to Rs 110-120 million per annum after retrenchment of employees. In addition, Rs 70-80 million per month is being spent to supply of gas.
The sources said, PSM management is being pressurised to reinstate those employees who were removed after due process aimed at preparing it for revival/privatisation on the basis of recommendations of Senator Mandokhel’s Committee. However, the government is trying to get a stay order against the Committee’s recommendations.
Staff reinstatement: PSM management being ‘pressurised’
According to media reports, PSM posted Rs 7.45 billion profit after tax in 2021-22 even though Mills’ total losses reached Rs 206 billion - well beyond its current assets worth Rs 195.5 billion.
However, Mumrez Khan, Convener PSM Stakeholders Group, who has offered his services to revive the mills from their own resources, argued that total value of PSM’s assets is Rs 830 billion, and claimed that value of assets has been accounted for properly.
PSM now owes the 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 whereas SSGCL is owed Rs.23 billion principal, and a disputed amount of LPS on this amount.
The PSM was profitable up to 2007-08, but since 2008-09, its downfall began. Finally, it completely shut down on June 10, 2015, and since then its losses are increasing day-by-day.
Despite the PSM being closed since 2015, the corporation has been paying salaries to the workforce by borrowing money from the government of Pakistan, which carries a significant interest rate. As a result, Government of Pakistan is forced to borrow money to fund these loans to the PSM.
In compliance with directions of Supreme Court of Pakistan, Government of Pakistan had sanctioned and released about Rs.13 billion for retrenchment of the PSM employees. Accordingly, 5,300 employees were retrenched during 2020 and 2021, which includes 49.9% of the mill’s work force and PSM filed the case in Labour Court for retrenchment of the remaining 51.1%.
The sources said from recent events at PSM, it appears that political forces are back at work and pushing for unfair and unwarranted removal of management personnel, blocking CEO selection by the Board, instructing Management to hold referendum for Union reinstatement, obstructing Pakistan Steel’s retrenchment petition in Sindh Labour court to outright telling management to reinstate people who were terminated following due process and in line with organization’s needs and current financial situation. This is taking place at a time when efforts were being made to reduce losses and revive the mills.
The Privatisation Commission which has been assigned responsibility to complete privatisation process is also going slow as it is headed by a PPP minister, a party opposed to the mills privatisation.
Copyright Business Recorder, 2023