PSM privatisation hangs in the balance over Rangers issue

ISLAMABAD: After controversy on extending special powers to Rangers by the Sindh government, the privatisation of the Pakistan Steel Mills (PSM) hangs in balance because of indecisiveness of Centre as well as the provincial governments. The Centre has again sent out official communication to the Sindh government for inquiring about its interest in privatisation of PSM till December 31, otherwise the government will move ahead with its original plan to complete this transaction in the current fiscal year.

“Yes, we are sending another letter to the Sindh government to get final response on the PSM till the deadline of December 31,” Chairman Privatisation Commission Muhammad Zubair told The News here Tuesday.

Another top official said the Privatisation Commission had arranged road shows where Chinese and other companies had shown interest in the privatisation of the PSM. “So we need response of the Sindh government as soon as possible,” said the sources.

Finance Minister Ishaq Dar had rejected transaction structure for the PSM as approved by the Privatisation Commission’s Board while chairing Cabinet Committee on Privatisation (CCOP).Dar had also taken decision to offer the Sindh government to acquire the PSM with all its assets and liabilities.

The PC Board had approved transaction structure under which it recommended the CCOP to retain liabilities of Rs142 billion and land assets while operating assets and employees related liabilities to be transferred to the buyer of the PSM.

But the CCOP rejected this sole option and decided to explore another option by first offering Sindh government to acquire the PSM with all assets and liabilities to the provincial government. The CCOP had decided that as the Sindh government had expressed interest to acquire the Steel Mills, the provincial government may be offered to acquire the PSMC with all its assets and liabilities.

Under the transaction structure, the PC Board had decided to keep 19,018 acres of land with estimated value of around Rs150 billion while retaining liabilities’ of Rs142 billion, totalling assets value at Rs243 billion against total liabilities of Rs183 billion.

Of assets, the buyer was proposed to get Rs44.6 billion worth of plant and the building valuing Rs27.5 billion. Among the liabilities, the buyer will bear the burden of Rs28 billion worth of liabilities of regular employees and other liabilities of Rs13.7 billion related to K-Electric and trade creditors. The government’s only asset is the land but the officials say there are questions about its mutation. The government might pick up Rs35.4 billion in payables to Sui Southern Gas Company, Rs50.5 billion of National Bank of Pakistan, Rs33 billion of federal government loans and Rs23 billion employees-related liabilities.