The management of Pakistan Steel Mills (PSM) has submitted details of contract employees and daily wagers to the federal government who are getting salaries without performance, well informed sources told Business Recorder. On January 29, 2016, Economic Coordination Committee (ECC) of the Cabinet approved payment of two-month salaries to employees of PSM subject to verification of the monthly claim of Pakistan Steel on account of salaries to be carried out by Privatisation Division, Finance Division and PSM.
PSM's losses are around Rs 700 million daily, just Rs 300 million less than PIA but the government is not seriously concentrating on this entity. Pakistan Steel Mills employees have also joined hands with PIA employees. On January 29, 2016, Privatisation Commission informed the ECC of the Cabinet that liquidity position of PSM had further deteriorated as the entity had struggled with the disposal of its finished goods inventory. PSM has salable inventory worth 388 million approximately while inventory of unfinished material is Rs 4.6 billion approximately which can only be sold once gas supply is restored and unfinished material converted into finished/ sellable products.
After a detailed discussion on payment of two months (October-November 2015) salaries to the employees, the ECC observed that the operations of the PSM had almost halted and its financial condition was deteriorating. The ECC, therefore, advised to curtail non-obligatory expenditure being incurred on salaries of contract employees and daily wagers.
According to sources, PSM management is giving millions of rupees to the contract employees and daily wagers under the garb of overtime at a time when the plant is non-operational. The management had received another bailout package of Rs 8.5 billion. The committee headed by Minister for Finance Senator Ishaq Dar further directed the Privatisation Division to provide month-wise information about total number of regular as well as contract employees and daily wagers working in Pakistan Steel Mills within ten days. PSM's current strength of employees is around 15,000 of which 5,000 were regularised by PPP government despite opposition by the then management. Presently, strength of job specialists is 1,200 who are reportedly hired on the basis of nepotism and favouritism.
Secretary Commerce has also been directed to intimate to the ECC about the outcome of the petition filed by PSM with the National Tariff Commission (NTC) regarding anti-dumping duties.
Minister for Industries and Production Ghulam Murtaza Khan Jatoi argues that PSM plant would not achieve 77 percent production without modernisation and revamping. "CEO PSM has claimed that he would achieve 77 percent production. I had doubts at that time, ECC repeatedly asked him to revise down capacity target but he didn't. The plant operated at an average of 40-45 percent capacity," Jatoi stated. According to Jatoi, Privatisation Commission is the authority which is responsible for deciding the future of PSM. "PC is in the driving seat. We are just overseeing PSM affairs on day to day basis," he continued.
The sources said PSM team led by Principal Executive Officer (PEO) Wasif Mehmood faced a tough time in official meetings in Islamabad due to poor performance of the management and generous expenditure. The PSM team did not defend the CEO when Minister Industries held him responsible for gas disconnection. The contract of CEO will expire next month whereas PEO Wasif Mehmood will retire within a couple of months. Both the Ministry of Industries and Production and PC are seriously concerned at PSMs financial indiscipline.
Analysts argue that the government should conduct performance audit of Pakistan Steel to fix responsibility of Mill's closure.