ISLAMABAD - Political differences between the federal and Sindh governments are delaying the privatisation of Pakistan Steel Mills (PSM), which is not operational from last nine months due to suspension of gas supply.

The federal government would not be able to privatise the PSM before June 2016 as was committed with the International Monetary Fund (IMF). The PML-N led government wants to privatise the loss-making entity as it could not afford to pay salaries to its workers, but its is not acceptable to the Sindh government led by PPP.

The PSM production is at zero level since June last year as Sui Southern Gas Company Limited (SSGC) had disconnected the gas supply to the mill due to the non-payment of bill worth Rs35 billion. Due to the financial constraints of the PSM, the federal government is providing salaries to 15,274 employees of the PSM from its own resources.

However, both the governments are blaming each other for the delay in privatization of PSM. “The federal government is not providing complete details regarding PSM, which is required by the provincial government,” said an official of the Sindh government while talking to The Nation. He added that Sindh government in a letter stated that it cannot make a decision on PSM till federal government takes decision including sharing PC’s Financial Advisor’s technical and financial due diligence reports, restoring gas supply to PSM immediately to avoid permanent damage to PSM and sharing an appropriate ‘incentive package’ for the revival of the national asset.

“Even, the federal government had not replied to the official letter,” he concluded.

On the other hand, the federal government blamed the provincial government for delay in privatisation of the mill. “We will approach foreign investors for the PSM once Sindh government refused to acquire it,” said a senior official of the Privatization Commission. “Despite having been provided complete access to PSM’s site and management, the government of Sindh has not been able to provide a definitive response to centre’s offer to acquire PSM” stated the official documents of the Privatization Commission (PC).

The documents further stated that PC approached the Sindh government in this regard vide its letters dated October 14, 2015, November 04, 2015 and December 03, 2015 to acquire the PSM with its assets and liabilities. However, the provincial government took four months to reply in January 2015, requesting certain documents in order to make a decision on the matter.

The PML-N government could not enhance the production of PSM despite approving Rs18.5 billion bailout package for the mill. Pakistan Steel Mills was a profitable entity during the fiscal year 2007-08, as the mill earned profit of Rs9.5 billion. Since then, Pakistan Steel Mills has turned into loss making entity and its accumulated losses and liabilities have swelled to Rs350 billion, including Rs160b in losses and Rs190b in payable debt liabilities.