ISLAMABAD: As Pakistan Steel Mills (PSM) continues to pile up liabilities, the government is considering leasing the country’s largest industrial complex to a private concern for 45 years under a revenue sharing arrangement, and laying off almost 5,000 employees.
On Tuesday, a transaction committee discussed various options in this regard, based on which the Privatisation Commission’s board will meet on Tuesday (today) to decide the duration of the lease. Sources privy to the development said a meeting of the cabinet committee on privatisation has been called over the weekend to approve the transaction structure.
“The present state of PSM is due to unchecked corruption, inefficiency, over-employment and the government’s lukewarm attitude towards its revival,” summarised a report to the Economic Coordination Committee by the secretary of the industries ministry.
Read: Pakistan Steel Mills financial woes continue
A previous attempt to sell the PSM by then prime minister Shaukat Aziz to a Saudi-led consortium for Rs21.6 billion ($362 million) was struck down by a landmark Supreme Court ruling in June 2006, which practically led to a halt of the privatisation programme for almost eight years.
The PSM’s accumulated losses and liabilities, which stood at Rs26bn at the end of 2008, have increased to around Rs415bn, including Rs166bn payable liabilities.
The government has injected over Rs85bn out of the federal budget for various bailout packages since than.
It was clear from the deliberations on Tuesday that the government would take care of liabilities worth Rs166 billion and offer voluntary separation scheme (VSS) to at least 4,835 employees and outsource the services of some of the remaining workforce to the new operator.
The PSM’s total liabilities and losses have more than doubled since the PML-N government came to power in May 2013. At least $5 billion has been spent on ‘replacement imports’ ever since the PSM was put on ‘hot-mode-zero production’ since June 2015.
An official who attended the meeting of the transaction committee led by Zafar Sobhani, a private sector expert, told Media that selling the company at this stage would be difficult to pull off. The options finalised by the transaction committee included a concession agreement or lease agreement with the private concern.
He said three lease or concession terms had been proposed with a maximum of 45 years. A Chinese group, an Iranian firm and a local steel group are reported to have shown interest.
