ISLAMABAD - The government on Thursday has decided to present the transaction structure for Pakistan Steel Mills (PSM) in next meeting of Cabinet Committee on Privatisation (CCoP).
A high-level committee to review the transaction structure of PSM was held under the chair of Federal Minister for privatisation Mohammedmian Soomro. The committee was constituted by the CCoP on 19th October 2020 to review the transaction structure of the PSM. In the meeting, the transaction structure for the revival of Pakistan Steel mills was discussed holistically. The participants unanimously agreed to the transaction structure recommended by the PC (Privatisation Commission) Board and presented to the CCoP in its meeting held in November 2020. The committee recommended that the transaction structure as proposed by the Ministry of Privatisation may be placed before CCoP in the next meeting for approval.
According to the report, the CCoP would consider transaction structure options: (i) transferring of identified core operating assets into a wholly-owned subsidiary of PSMC through the scheme of arrangement (as provided in the Companies Act 2017) followed by the sale of majority shares of the newly-formed subsidiary (without transferring of full ownership) to strategic private sector partner; OR (ii) transferring of identified core operating assets to private sector strategic partner through concession/lease agreement for 30 years.
The federal government had already reiterated to run the Pakistan Steel Mills (PSM) through Public-Private Partnership for which 95 per cent of the existing 9,500 employees would be terminated in different phases after paying them monetary benefits. Federal Minister for Industries and Production Hammad Azhar had recently said that the incumbent government would terminate 95 per cent of the all 9,500 employees of the PSM in different phases by paying monetary benefits. On average, every sacked employee was estimated to receive Rs2.3 million. In the first phase, the government has paid around Rs10 billion to 4,500 sacked employees.
The Mill was closed down in 2015. The loans and liabilities had increased to Rs230 billion and losses to Rs200 billion. The federal government has to pay Rs750 million for salaries and pensions of the PSM employees. The federal government had paid Rs35 billion on salaries of the closed PSM.
The committee constituted by the Cabinet Committee on Privatisation (CCoP), on 19th October 2020; comprised Minister for Industries & Production Hammad Azhar, Chairman, Board of Investment, Secretary Privatisation, Secretary Finance and Financial advisors for PSMC. Advisor to PM on institutional reforms, Ishrat Hussain; SAPM on Petroleum Nadeem Baber, SAPM on Power Tabish Gohar, attended the meeting on special invitation.