ISLAMABAD - The government is considering injecting further billions of rupees in financially troubled Pakistan Steel Mills (PSM) to stand it on its own feet before going for privatization process of the national entity as decided by Cabinet Committee on Privatization (CCOP).
Sources said that the government might give another bailout package to PSM before its privatization. However, they said that amount of bailout package could be around Rs 25 billion to Rs 30 billion, which would be approved by Economic Coordination Committee (ECC) of the Cabinet. Pakistan Steel Mills had already gotten several bailout packages, which remained futile to reduce the losses of national entity. The government had given some four bailout packages worth Rs40.507 billion to the state-owned steel mill from 2009 to 2012.
Pakistan Steel Mills has borne a massive loss of Rs86.27 billion during the rule of the previous government of Pakistan Peoples Party (PPP) from 2008 to 2013. Therefore, the incumbent government of Pakistan Muslim League Nawaz (PML-N) has decided to privatize Pakistan Steel Mills and other 30 public sector entities. The Cabinet Committee on Privatisation (CCoP) on October 3 decided to privatize 31 public sector entities including Pakistan International Airlines (PIA) and Pakistan Steel Mills (PSM) as committed with the International Monetary Fund (IMF).
Sources said that privatization of PSM in existing form might not be a wise decision, as organization does not have resources to pay salaries to staff and to purchase raw materials. Therefore, the government is considering giving a bailout package to stand it on its own feet before going for privatization.
Sources were of the view that the government wants to improve the efficiency of PSM by injecting a bailout package before its privatization, as it would attract the foreign investors. Sources further informed that the ministry of industries was of the opinion that PSM could be turned around with Rs28.5 billion to fetch better price for its privatization.
It is worth mentioning here that ECC had recently (September 7) decided to approve a 3-month bailout package of Rs 2.9 billion for Pakistan Steel Mills (PSM) of which Rs 1.5 billion were released in September, Rs 700 million in October and Rs 700 million in November 2013.