Govt indecision on PSM adding to losses

NA body told that Sindh government opposes allocation of 1500 acre of PSM land to industrial park under CPEC

Islamabad: Pakistan’s one of the biggest industrial units, the Pakistan Steel Mills (PSM) is closed for the last 21 months and is every month adding Rs1.4 billion to its liabilities and losses, but the government is still indecisive about its fate despite the Privatisation Commission has spent around four years pondering whether to privatise or lease it out.

The National Assembly Standing Committee on Industries and Production that met here with MNA Asad Umar in the chair noted that the committee has been discussing the issues for last several years, but no concrete result is coming out, as neither the committee has been provided with concrete official plans of the government on which it could forcefully recommend to the government nor the Privatisation Commission and relevant ministries have powers to decide on it.

Secretary Privatisation Commission Sardar Ahmad Nawaz Sukhera told the committee that the commission was working on two models one is operationalisation of PSM and other is its liabilities settlement that is around Rs170 billion. He requested the committee for a month time to present both the models to the committee which was accepted.

Interestingly, MNA Abdul Hakeem Baloch expressed concern over the federal government’s allocation of 1500 acres of land of PSM for setting up industrial part under China-Pakistan Economic Corridor (CPEC) without taking the consent of the provincial government. He said that Sindh government has given around 17,000 acres of land to the Steel mills for operational purposes and not for others. This land belongs to provincial government. In a recent letter of Sindh to federal government, it was stated that the land would legally stand returned to the province if was used for any other purpose or given to third party.

Secretary industries and Production Khizar Hayat Gondal replied that this land was given for steel mills and allied industries and can be used for such purposes. Baloch said that since the mills is closed, then how the government can give it for allied industries.

The government official told the committee that PSM had purchased the land from provincial government in 1974. For giving it to third party, we have to take no objection certificate (NOC) from Sindh government and it is binding. Chairman of the committee asked the official if Sindh had sold the land, then why it is seeking NOC from the province. There was no satisfactory reply from the official.

Asad Umar said that due to tussle between province and center, financial close of the project under CPEC is in doldrums, so both should amicably settle it or take it to the forum of Council of Common Interests (CCI).

The committee while opposing the Sugar Mills Association plea to ban setting up new sugar mills, recommended to the government to lift ban on new mills and proposed that Prime Minister Nawaz Sharif should constitute an inter-ministerial committee to study and decide the issues regarding this sector.

The Utility Stores Corporation (USC) when asked that how many daily wage employees are working in the corporation and they were not regularized despite being working there for many months and even year. The chief Operating Officer of the corporation replied that there are 3581 daily wage employees and mostly are working for longer period. Chairman of the committee said that legally after 89 days you cannot consider an employee as daily wager, “you are violating the law flagrantly.” The committee sought from the USC to submit the proposal in a month to the committee that how you will fix the issue.  

The committee unanimously expressed serious concern over additional ‘premium’ usually termed as ‘OWN’ being charged from the consumers, for early delivery of the vehicles by car manufacturers’ dealers. They noted that normally they take one-tenth of the car price as OWN to early deliver them the car.

Officials belonging to various departments falling under the Ministry of Industries and Production too expressed their concerns over the issue.    

While, Qaiser Ahmed Sheikh, MNA belonging to the ruling party PML-N said that buying cars was an issue of ordinary citizens, “We come across somebody who has been asked to pay this additional money to get a vehicle – this is something we all face and has to be cleared.”

Qaiser Ahmed Sheikh said one reason for the market manipulation by the auto companies was the monopoly status enjoyed by them.

“This is actually our failure – we all have failed to develop competition in the auto sector either by bringing in new players or by increasing production,” he added. The government should reduce import duty on cars, as the local manufacturers have been ‘highly protected’ so they ultimately fleecing the consumers.

“How is that possible that the senior management of auto companies were unaware of what their dealers were doing?” Asad said adding, “I can say that the executives of fertilizer companies know where their product was going – so how was it that those in auto sector were unaware?”

He added that the argument was not about who was bagging this extra money “but the point is that consumers were paying it and we are against it.”

He directed CEO EDB to get specific answer from the auto companies and their proposals to abolish OWN.

The Committee was informed that the several measures have been suggested under the Auto Policy 2016, and as a result of it along with the measures taken by Competition Commission of Pakistan (CCP) auto companies have started to refund the some money in case of late delivery.

The officials of the EDB informed the Committee that only Honda has so far paid the penalty amount of Rs15,000 for late deliveries, while Toyota has agreed to pay the amount and there was no response from Suzuki motors.

Mr Asad Umar asked if the Auto Policy was binding for the manufacturers or it was merely a guideline, and the Committee was informed that there was no legal binding and there was a lenient approach of the government in this regard.

“We recommend that there should be a clear cut government policy in this regard and the Auto Policy should have the backing of the law,” Chairman of the Committee ruled.

The committee was briefed over the development budget of Small and Medium Enterprise Development Authority (Smeda). The Committee directed the Ministry of Industries to ensure that SME projects are initiated in small towns of all the provinces.