Pakistan Steel Mills (PSM) Board of Directors (BoD) has sought a clarification from the federal government on its objectives relating to the Mills'' privatisation, well informed sources told Business Recorder.
"The government should also clearly define its privatisation objectives. Does it want to privatise PSM as an operating unit by giving some financial injection for minimal operations or does it want to privatise a totally shutdown unit by just providing bare minimum pre-privatisation fixed costs eg salaries, standby utilities, etc?" the sources said quoting a memorandum titled " natural gas supply pressure reduction/ interruption since June 10, 2015". According to the memorandum, Board of Directors in its meeting held on November 4, 2015 was briefed by APEO (TS) that a high level ministerial meeting under the chairmanship of Minister for Industries and Production including Minister Petroleum was held in the office of Minister of Industries and Production on September 18, 2015 for restoration of gas supply to Pakistan Steel. PSM offered upfront payment of SSGC bill for the month of August 2015 (Rs 68.81 million) and advance payment through post-dated cheques for the month of September 2015 (Rs 50 million).
The issue of outstanding liabilities was discussed and it was decided that the possibility of transferring land owned by PSM to SSGC against outstanding liabilities would also be explored. In this regard Chairman, Privatisation Commission, Muhammad Zubair assured the Ministry of Petroleum and Natural Resources that he will take up the matter with Finance Minister while taking approval relating to transaction structure of privatisation for PSM. Ministry of Industries and Production and PSM stated that they would have no objection to the proposed transfer of land as adjustment of SSGC dues subject to reconciliation of accounts.
In order to save national asset from total disaster and to prevent damage to sophisticated equipment prior to privatisation, it was decided to restore the gas pressure immediately by SSGC. The Ministry has been informed that payment of current bill on due date will be made but due to non availability of liquidity pre-payment is not possible. Whereas, discussed and proposed options such as the pre-payment of subsequent billing months, disconnection/pressure reduction of natural gas were not accepted due to its dire repercussions on plant serviceability. The memorandum further stated that CEO Pakistan Steel apprised the board of the efforts made, to restore the gas supply, save the plant and its production units and commence production.
He added that Pakistan Steel has no cash flow to pay Rs 60 million in advance. The inventory of 75,000 MTN of slab is available and will take time to be rolled and marketed. As such the condition is too stringent for Pakistan Steel. At the end he proposed that Board should take a stand and position on this issue and should register its concern, as the closure of plant is hurting the process of privatisation besides it is likely to cause irreparable damage to the plant, equipment and machinery.
One of the Board members, Shah M Saad Husain showed serious reservations on the current status of PSM. He observed that although PSM is an asset of the Government of Pakistan, the concerned government organisations and ministries have failed to reach consensus on the matter of restoration of gas supply. He wondered if decision makers realise the magnitude and consequences of the possible irreversible damage to plant and equipment which would also adversely impact the privatisation process.
Other Board members also showed their serious concern and resolved: (i) that the efforts of CEO Pakistan Steel to restore natural gas supply and save the plant from damage are appreciated. The Board requested MoI&P to revisit its decision of payment of Rs 60 million ie Bill for the month of September 2015 on due date (21.10.2015) along with supply of gas for subsequent months on pre-payment with the condition of gas disconnection on non-payment. PSM is currently not in a position to arrange these advance payments due to financial constraints. Delays in payment should not lead to automatic, sudden and unilateral gas disconnection as this would result in serious damage to costly plant and equipment; and (ii) that this resolution should be moved to relevant quarters to allow immediate restoration of gas as this will also adversely affect Privatisation. Discontinuation of gas and therefore, PSM's inability to operate is also generating unnecessary controversy and criticism of government in electronic and print media.
The incumbent CEO, Major General Zaheer Ahmed (Retd), was appointed in April 2014. He is the second CEO who is enjoying similar salary and perks and privileges as had been paid to Major General Muhammad Javed (Retd).