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January 15, 2021

Govt expected to complete PSM land valuation by January-end

Business

January 15, 2021

ISLAMABAD: The government is expected to complete the land valuation of Pakistan Steel Mills as a part of its revival plan by the end of January and expression of interests will be sought from investors in March, officials said on Thursday.

Officials told a meeting chaired by Minister for Privatisation Mohammedmian Soomro that detailed meetings are held with potential investors regarding the revival of Pakistan Steel Mills. These investors/parties are from China, Russia and Korea and the meetings are being held almost on daily basis.

Last month, the Cabinet Committee on Privatisation approved the sale of PSM’s core operating assets to the private sector. It approved the transaction structure for the mill.

The matters relating to the privatisation/divestment of shares and options regarding management control of power distribution companies were also discussed. The final decision to that effect will be taken after receiving the proposals from the ministry of power and other relevant forums.

Soomro said that he would himself prefer to use e-files instead of manual files. “Legal and policy matters relating to privatisation must be taken into account and legal cases must be disposed of in a transparent and an efficient manner,” he said. “In order to work more efficiently we must shift to digitisation of data/e-office/e-filing without further ado.”

The privatisation commission asked the power division and relevant ministries to provide their proposals for this transaction. After getting the proposal, the government would take a final decision on it.

There are 10 public distribution companies operating across Pakistan with varying degrees of efficiency and performance.

“Investment in transmission and distribution has been lagging, with increases in capacity by around 26 and 33 percent respectively, creating bottlenecks and inefficiencies in the system,” the International Monetary Fund said in a report.

“The operational efficiency of a number of discos, as measured by their transmission and distribution losses, is weak, with energy losses in the range of 20–40 percent of the energy received. Similarly, collection from consumers in many of the discos falls significantly short of the amount of energy billed.

These challenges point to the need for a comprehensive reform of the discos to improve their collections and reduce their transmission and distribution losses.”

The approved structure for Pakistan Steel Mills will allow the transfer of identified core operating assets into a wholly-owned subsidiary of PSMC through a scheme of arrangement as provided in the Companies Act 2017 followed by the sale of majority shares of the newly formed subsidiary, without transferring full ownership to the strategic private sector partner.

After accumulating billions of losses since 2008/09, the mill was closed in 2015 and is still consuming taxpayers’ money, as every year the government is paying hundreds of millions of rupees under the head to pay the salaries and pensions of the workers. It is worth mentioning that from FY2001 to FY08, the mill remained in profit.

The government is working on the revival of the mills through capital and technology investment and is in negotiation with interested foreign parties to enable it a fully operational entity.