Government reconsiders PSM’s privatisation

ISLAMABAD: The government has decided to reconsider the privatisation plan of cash-bleeding Pakistan Steel Mills (PSM) as talks with the International Monetary Fund (IMF) that supports shedding of loss-making assets are in final stages, people familiar with the matter said on Monday.

A top official told The News that the Economic Coordination Committee (ECC) of the cabinet in principle decided to privatise PSM that renders Rs200 billion in annual losses to exchequer.

“The ECC directed the ministry of industries to come up with a summary of (re)putting PSM on privatisation list,” the official, who attended the ECC meeting, said, requesting anonymity. “After detailed deliberations, there have two options been left before the government: either to close down the PSM or explore possibility of its sale. The finance ministry said the revival committee on PSM gave a comprehensive presentation to the ECC, proposing various recommendations to make PSM a profitable and competitive organisation.

“The committee directed [the] Industries and Production Division and Privatization Commission to submit formal recommendations, in the form of summary, to ECC for a final decision,” the ministry said in a statement.

The ECC took the decision at a meeting presided over by the Finance Minister Asad Umar. Critics said the Pakistan Tehreek-e-Insaf-led government took another u-turn after exploring all options related to the revival plan for cash-bleeding PSM and after wasting several months in this exercise.

Sources said the meeting was held ahead of finance minister’s departure to Washington DC for attending the annual spring meeting of the International Monetary Fund (IMF)/World Bank over the coming weekend. Pakistan is in talks with the IMF for the country's 13th loan program since late 1980s.

They said the ECC meeting discussed all the options in details but finally decided to explore possibility of PSM sale again as different efforts have failed to yield the desired results. “Keeping PSM into domain of the public sector will increase its losses piling up with every passing month,” an official said.

The government previously excluded sale of PSM from the list of privatisation, but now after exploring all the options including public-private partnership and leasing out to the potential party it decided to put it again on the privatisation list.

“If the government would lease out the PSM to single party it would raise the question of transparency,” the official added. There might be five to six interested buyers and the government would make fresh efforts to privatise the PSM as early as possible. The ECC further approved a proposal of communication division to provide technical supplementary grant amounting to five million rupees for the construction of additional carriageway on Torkham-Jalalabad road under the Prime Minister’s program for reconstruction of Afghanistan.

“The decision of ECC would not only benefit the people and business community of the two neighbouring countries but would also help promoting trade between Pakistan and Afghanistan as well as central Asian states,” the finance ministry said in the statement.