No one wants Steel Mills, to be removed from privatisation list
Business
Officials say accumulated losses of now-defunct industrial unit have reached Rs206bn
ISLAMABAD (Dunya News/Web Desk) – No one is interested in buying the Pakistan Steel Mills (PSM), the Senate Standing Committee on Industries and Production was informed on Thursday, as the industrial unit, which was the largest in Pakistan when operational, continues denting the national exchequer.
Therefore, the Privatisation Commission secretary said, they had a proposed in writing to the federal cabinet to remove the now-defunct unit from the list of those state-owned enterprises which were to be offered for sale.
Despite being shut down in 2015, the Steel Mills had to repay Rs110 billion to the government and the interest payment on the said amount stood at Rs18 billion per annum, the PSM chief financial officer said. He added that the annual expenditure on salaries and pensions stood at Rs2.5bn.
About the accumulated losses, the CFO said amount had ballooned to Rs206bn.
On the occasion, the PSM officials said theft was common despite the fact that 500 security men, including Rangers personnel, had been deployed at the Steel Mills. Scrap worth Rs12.8 million was stolen last year alone, they told the senators.
Talking about the future plans, he said an export promotion zone would be developed at the PSM and the process to revive the plant could take up to six months.
At the same time, the CFO said $580m were required each year to achieve the existing capacity of 1.1m tonnes annually which would jump to $1.4bn for increasing it to 3m tonnes.
Meanwhile, one of the standing committee member Senator Fida Muhammad walked out of the meeting in protest over a piecemeal briefing.
PRIVATISATION PLAN
Under the $3bn bailout package from the IMF, that was critical in averting a sovereign debt default, state-owned entities (SOEs), whose losses are burning a hole in government finances, will need stronger governance.
As of 2020, the accumulated losses for SOEs amounted to Rs500bn ($1.74bn), said Caretaker Finance Minister Shamshad Akhtar said at a press conference last month.
She said under the government’s draft policy on SOEs, the appointment of independent directors will be through a nomination process, adding that no ministry would be able to issue directives to SOEs in order to improve governance.
Later in the day, Caretaker Privatisation Minister Fawad Hasan Fawad said there was only one bidder left for the PSM.
He said that prior to COVID-19, there were four companies that were interested and qualified to bid for Pakistan Steel Mills (PSM), but three of them have backed out for a variety of reasons including global demand for steel.
Fawad added that the caretaker government was in talks with the financial planner appointed for the transaction; and that only PSM’s operational assets were up for sale.
The future of loss-making SOEs is question as an IMF team will reach Pakistan on Nov 2 for the first of the two reviews of the current deal amid the pressure to meet all the conditions set under the agreement. And the privatisation is at the top of the Washington-based institutions.
