Privatisation Commission (PC) is likely to create a special purpose vehicle (SPV) to settle Pakistan Steel Mills (PSM) liabilities hovering around Rs 188 billion aimed at revival of whole unit instead on staggered units, well informed sources in PC told Business Recorder. The PC plan, sources said, was shared by Secretary PC Irfan Ali at a recent meeting of PSM Board held in Karachi which discussed different issues being faced by the mills.
The plan envisages creating of a SPV wherein the liabilities of PSM as well as its non-core land (about 7,582 acres) of which 1,808 acres was un-mutated) will be parked without changing its ownership ie GoP, PSM, SSGC and NBP will be the shareholders of proposed SPV which will operate as industrialization promotion company/ industrial park and lease out the land on the pattern / model of National Industrial Parks (NIP). The shareholders of the SPV will be entitled to shares according to proportion of their liabilities. The plan is expected to be submitted to the Cabinet Committee on Privatisation (CCoP) for approval.
The PSM has been running in losses since 2008-09 and has so far incurred a loss of about Rs 188 billion which also includes a bailout package of Rs 18.5 billion approved by the ECC headed by the then Finance Minister Senator Ishaq Dar after the then CEO had promised to run the mill at full capacity. However, despite best efforts, the mill has been closed since June 10, 2015 and the federal government is paying Rs 380 million per month for salaries of the employees with delay and even after protests.
The major liabilities of PSM include outstanding dues of Sui Southern Gas Company Limited (SSGCL), National Bank of Pakistan (NBP), employees' provident fund and gratuity, etc. The employees' liabilities are likely to exceed Rs 15 billion by the end of current fiscal year.
Without settlement of current liabilities, neither is it possible to privatize or lease the mills nor to revive it. According to the secretary privatisation, the liabilities of retired employees, being the humanitarian issue, and disbursement of their dues is the top priority of the government.
The meeting was apprised that PSM Board has a committee which is working on Business Development Plan (BDP) for revival/ staggered operation of different units of the PSM.
The board chairman who has witnessed destruction of PSM with his eyes being member of the board for the last many years, was of the view that the federal government should give a clear-cut direction whether or not it is interested in revival of the mill.
Chairman National Assembly Standing Committee, Asad Umar has also written a letter to the NAB chairman for launching investigation into the irregularities that led to the closure of Pakistan Steel Mills. He had tried to appoint Zaigham Rizvi, former CEO of Al-Tuwairqi Steel Mills as CEO of PSM but his efforts remained unfruitful. He also invited the office-bearers of Insaf Union of PSM at a meeting to present their viewpoint.
Privatisation Minister Daniyal Aziz Ch is of the view that PSM has acquired the status of "negative equity." He recently stated that the business community was well aware of the term 'negative equity', which was the worst business condition of any entity or enterprise. He said that the government was fully aware of the problems of retired employees and widows of the late employees of PSM and an amount of Rs 322 million has been paid to the widows. He said the government would ensure speedy payment of the remaining amount to the widows.