ISLAMABAD - The Sindh government would be offered to acquire the Pakistan Steel Mills (PSM) with all its assets and liabilities as the province expressed interest to buy the loss making public sector entity.

The Cabinet Committee on Privatisation (CCoP), in its meeting chaired by Finance Minister Ishaq Dar, has taken this decision on Friday. The CCoP has considered the transaction structures for both Pakistan Steel Mills and Faisalabad Electric Supply Company (FESCO).

Pakistan had committed with International Monetary Fund (IMF) to privatise the Pakistan Steel Mills by the end of June 2016. The government has failed to enhance the PSM capacity to 77 percent despite giving bailout package worth of Rs22 billion, as Mill is running at less than one percent of the capacity. The board of the Privatisation Commission (PC) has recommended the CCoP to transfer operating assets and regular employees-related liabilities to the buyer of the PSM. However, the CCoP decided to offer Sindh government to acquire the Pakistan Steel Mills (PSM) with all its assets and liabilities. The financial advisors of the PSM have estimated the company’s assets at Rs279 billion in which Rs175 billion of federal government and PSM owes Rs104 billion. Similarly, the total liabilities at Rs173 billion include Rs134 billion towards the federal government and Rs39 billion on PSM.

Sources informed that federal government would wait for the reply of Sindh government for making deal on PSM.

The CCoP also approved the transaction structure for FESCO, which includes 74pc equity sale. Sources said that financial advisor has proposed three options for Fesco’s privatisation to divest 27 percent, 51 percent or 75 percent shares. The CCoP after the recommendations of the board of Privatisation Commission approved privatisation of 74 percent shares and book value of total share was reported to be Rs 11 billion. They said that debt liability, if any, against the company would be cleared or excluded from the value before privatisation.

The Fesco transaction structure, it may be recalled was presented to the CCoP a few weeks earlier. The CCoP after considering the recommendation of the Privatisation Commission had set up a broad-based committee consisting of representatives of different ministries and departments to examine in detail the proposal related to valuation of assets. The said committee submitted its findings and recommendations to the CCOP.

Fesco has 3.3 million connections, serving one-tenth of the country’s population. It is one of the most efficient companies, having slightly over one-tenth line losses and a recovery ratio of over 99pc.

Federal Minister for Information, Pervaiz Rashid, Federal Minister for P&NR, Shahid Khaqan Abbasi, SAPM on Law, Ashtar Ausaf, Chairman Privatisation Commission Mohammad Zubair, Chairman BOI, Miftah Ismail, SAPM on Economic Affairs, Barrister Zafarullah, Secretary Finance Dr. Waqar Masood Khan, Secretary Privatisation Commission, Ahmed Nawaz Sukhera and other senior officials of various ministries attended the meeting.