Pakistan Steel needs Rs13bn to pay overdue salaries, utility bills

KARACHI: Pakistan Steel Mills planned to ask the federal government for another bailout worth as much as Rs13 billion to pay overdue salaries of its employees, as the country’s biggest steel manufacturing facility’s finance has grown increasingly precarious on downbeat productions, officials said on Thursday.
They added that the ministry of industries and production is preparing a summary to suggest the Economic Coordination Committee (ECC) of the Cabinet to grant more fund to the steel mills to clear salaries and utilities bills, which are overdue since November 2014.
“We are preparing a summary in which we would ask the ECC to give more money to Pakistan Steel Mills,” said Raja Hasan Abbas, secretary of the ministry. “However, the amount is yet to be finalised.”
Abbas said the ECC may consider the request in its meeting due next week and the ministry would ask for more funds “to at least pay salaries and utility bills.”
Pakistan Steel Mills said it requires Rs13 billion for crisis resolution and for future use. Its projected Rs4.5 billion will be needed for salaries (from November 2014 to April 2015) of 15,500 employees and utilities bills, and Rs8.5 billion for “a major turnaround of the mills.”
Pakistan Steel Mills has already received a sum of Rs18.5 billion since May 2014 under the current bailout package. The bailout package was granted to the Pakistan Steel Mills on the assurance from its management that it would bring the production to the level of 77 percent by February 2015.
On the contrary, its losses and liabilities are increasing every passing day.
Officials said the mills have billions of rupees hard cash in the bank accounts, but those funds will be utilised for the import of raw materials.
Spokesman of Pakistan Steel said the mills has Rs8.5 billion in shape of raw material, finished goods, and hard cash for importing more raw material. He said the PSM is giving on an average 30 percent production.
Sources, however said the integrated steel complex has been giving an average of 16 percent production for the last six years.
The government of Pakistan Muslim League Nawaz planned to give a major production boost ahead of the planned privatisation of Pakistan Steel expected to happen during the current year.
Pakistan Steel, facing accumulated losses of Rs260 billion, is one of the first big firms to go under the hammer under government’s privatisation plan, in which the debt-laden country hopes to raise billions of dollars by the end of 2015.
Industry officials said Pakistan Steel requires eliminating corruption and cut jobs to check losses and bloated costs.
They said the previous government of Pakistan Peoples Party gave over Rs40 billion in various bailout packages to the steel mills but none of the packages worked out.