The government's inability to privatise Pakistan Steel Mills (PSM) has cost the national exchequer Rs 18.5 billion during the last two years for payment of PSM employees' salaries. Sources said that the salaries disbursed to the PSM employees are Rs 18.5 billion since the expiry of the bailout package in November, 2014.
They said that the prospects of the privatisation of the PSM do not appear very bright owing to wrangling between federal and provincial government on the issue. A meeting of the Economic Co-ordination Committee (ECC) of the Cabinet has approved disbursement of Rs 380 million to the PSM employees for the month of November 2016 on February 2017.
A meeting of the ECC of the Cabinet held on February 2017 was submitted a summary by the Privatisation Commission of Pakistan for approval and release of salary to the employees for the month of November 2016. The privatisation commission stated that the ECC meeting held on January 18, 2017 considered a summary and approved the payment of one month salary to the employees of PSM for the month of October, 2016.
A committee was formed by the ECC of the Cabinet on January 29, 2016 with Privatisation Division, Finance Division and Pakistan Steel Mills to verify the salary bill of PSM. The committee, subsequent to a series of meetings between all stakeholders, decided that PSM would reduce its salary bill to Rs 380 million from March, 2016 after rationalising the Contract and daily wage employees.
Accordingly, the salary bill for the employees of the PSMC, which was Rs 435 million in November, 2015 was reduced to Rs 380 million per month in March, 2016. However, PSM still retains 281 daily wage employees and 191 contract employees as of November, 2016.
The justification cited for daily wages employees was that bulk of them are engaged in the food shop, transport department, medical department, township department and the guest house. The PSM provides food to the employees by operating food shop and shortfall of drivers in transport department is being met through contract and daily wage drivers. Additionally, Pakistan Steel Hospital is also being run by PSM and shortfall of doctors /para-medical staff is also being met through daily wage and contract employees.
The contractual employees' justification provided to the ECC was that contract employees are mostly engaged for 100 bed hospital/medical department (Doctors/para-medics) and education department (mostly teachers) to run colleges/ schools run under PSM.
Most of the contracts are valid till the end of July 2017. In case these contracts are terminated with immediate effect, PSM will have to pay three months salary including one month salary to avoid legal implications.
The ECC was requested that given the operations of the PSM are at halt and that the employees have not been paid salaries for the past three months, ie since November, 2016, the ECC of the Cabinet may approve disbursement of Rs 380 million for the month of November, 2016 to the employees of PSM.