Centre readies PSM privatisation process

Sindh seeks necessary details to make a decision on the issue

ISLAMABAD: The government has finalised the transaction structure for the privatisation of Pakistan Steel Mills (PSM), which soon would be presented before the Council of Common Interests (CCI) for its approval, Privatisation Commission Chairman Muhammad Zubair has said.

Any further delay in taking a decision on privatisation of this public sector enterprise would cost the national kitty heavily, he said. The federal government has formally asked the provincial government if they are interested in buying the PSM, Zubair said. He was talking to The News exclusively.

“We sent a letter to the Sindh government in October but they have still not given any formal response. The federal government also contacted the Khyber Pakhtunkhwa government but Chief Minister Pervez Khattak said they are not interested in it,” said Zubair.

He said the PSM was costing the federal government heavily with the passage of time despite all the efforts to revive the sick unit. The government appointed a professional Board of Directors (BoD) and initially it showed some improvement as at one stage the production of PSM reached 60 percent of its capacity. However, once the supply of natural gas was reduced, it started affecting the production and with the current liabilities and payable debts, it is very difficult to revive this sick unit.

“We have to decide what can be done but the government would have to own up the liabilities or any further delay in privatisation would increase the liabilities,” commented Zubair.

Former finance minister, PPP’s Senator Saleem Mandviwala, said the government was running the state affairs non-seriously. The Sindh government has shown an interest in buying the PSM but it was not possible until the federal government shows seriousness.

“We received a letter from the federal government about the privatisation of PSM. However, other than just informing that the federal government is intending to sell the PSM, no information has been provided. We are ready to talk with the federal government and the Sindh government would look into the terms and conditions before taking any decision in this regard,” commented Mandviwala.

As per detailed audited accounts, PSM’s net losses during 2008-09, 2009-10, 2010-11, 2011-12, 2012-13 & 2013-14 were respectively Rs26,526 million, Rs11,566 million, Rs12,434 million, Rs22,273 million, Rs28,648 million & Rs25,836 million respectively and Rs24,619 million in the year 2014-15 (unaudited) and Rs8,610 million from July 2015 to October 2015. The total losses thus add up to Rs160,512 million plus Rs159,000 million on account of liabilities till June 2015, making it a total of Rs319,512 million.

Total financial impact to PSM accounts was Rs365,512 million from July 2008 to December 2015. When referred about the current losses and liabilities of PSM, Zubair commented that the government is well aware of the financial conditions and this is the reason they have decided to privatise the unit.

About poor performance of the current management of PSM and its members of BoD, he said they could not be blamed as initially the PSM showed improvement and the production level also increased. But if there is no gas supplied to the mills, how could the management be blamed.

NNI ADDS: Sindh Finance Minister Murad Ali Shah has written to the Privatisation Commission that the province has never asked to get the strategic assets like PSM but if the Commission is making an offer, the province would like to look at financial and other necessary details before making a decision.

He drew the federal government’s attention towards a Supreme Court order mentioning that the matter of privatisation of the Mills should be sent to the Council of Common Interest.

He wrote that the federal government should share with the province necessary details and it remains to be seen what decision the CCI takes on the matter if it is brought there.