ISLAMABAD

The Sindh government has yet to reply officially to the offer made by Privatization Commission to acquire loss-making Pakistan Steel Mills that is delaying federal government’s plans to explore foreign investment for PSM.

The Cabinet Committee on Privatization (CCOP) on October 2, 2015 decided that government of Sindh should be offered to acquire PSM with all its assets and liabilities. “The Sindh government has not replied yet to the letter written by Chairman Privatization Commission to get PSM control despite passing almost one month,” said an official of the Privatization Commission. We had given first chance to the province to run the Mill before going to make negotiations with the foreign investors, he added.

He further said that federal government would look for Chinese or Russian investment in PSM if Sindh officially refuses to acquire the mill. The Privatization Commission held road shows in China last month for the privatization of the PSM. Chinese Metallurgical Group Corporation (MCC) had also expressed interest to participate in the privatization of the PSM, as they want to revamp the mills and install a new plant to increase its total production capacity to five million tons. Similarly, Russia has also shown interest in PSM.

Sources told The Nation that chairman and some members of the Privatization Commission were against making offer to the Sindh government to run the Pakistan Steel Mills, as they wanted that foreign investors should buy the PSM. The CCOP, headed by Finance Minister Ishaq Dar, had taken the decision that provincial government should be given first right to run the PSM.

Another official of the Privatization Commission said that Pakistan Peoples Party (PPP), which has the government in Sindh, seems undecided on the issue of getting PSM’s control. Some of the PPP leaders are in favour while others are against acquiring the loss-making entity.

Pakistan had committed with the International Monetary Fund that (IMF) to privatize the PSM during ongoing financial year, before end of June 2016.

The PSM is the only integrated steel plant of the country with a production capacity of 1.1 million tons per year, expandable up to 3m tons. The PSM, set up in 1984, has a workforce of 15,274 and has 20 industrial units.

The PSM is not operational from last few months due to the suspension of gas supply. According to the documents of the PC, the accumulated loss of the PSM had increased to Rs142.9 billion during the fiscal year 2014-2015, as the capacity of the mill was only 20 percent. The PSM was a profitable entity till the fiscal year 2007-08, when the Mill earned profit of Rs9.5 billion. Since then, the mill had turned into loss-making entity.

The documents further showed that total assets of the PSM as of June 2015 are of Rs153.8 billion and total liabilities are of Rs128.2 billion. The total land of PSM is 19000 acres and construction of PSM is on 4500 acres and the proposed transaction constitutes only land that the PSM is constructed on.