The PML-N government on Tuesday made it clear that there is no other option than to privatise Pakistan International Airlines and Pakistan Steel Mills as their accumulated losses surged to Rs226.8 billion and Rs142.8 billion respectively.

Minister of State for Privatisation Mohammad Zubair admitted that Pakistan Steel Mills (PSM), which is offered for privatisation, is not operational due to the suspension of gas supply. Sui Southern Gas Company Limited (SSGCL) had disconnected the gas supply to the PSM due to the non-payment of bill worth of Rs35 billion. “The federal government has no capacity to the pay bill of PSM”, he said and added that government is working on plan to make PSM operational again before its privatisation.

Secretary Finance Dr Waqar Masood informed that actual bill of PSM was Rs17 billion while remaining Rs18 billion is of late payment surcharge. Minister of State briefed the Senate Standing Committee on Finance and Revenue on the government’s plan to privatise PIA, PSM and others. Senators have expressed concerns on the privatisation plan of the incumbent government.

The PSM was a profitable entity during the fiscal year 2007-08, as the Mill earned profit worth of Rs9.5 billion. Since than, Pakistan Steel Mills turned into loss making entity, as its losses surged to Rs142.87 billion in financial year 2014-15.

Mohammad Zubair informed the Senate’s panel that federal government is waiting for the reply of Sindh government of taking over the PSM. We will go ahead for its privatisation if Sindh government does not show any interest in acquiring the loss-making entity. Foreign groups of China and Russia have shown interest in taking part in privatisation of the Pakistan Steel Mills, he added.

Chairman Senate Standing Committee on Finance and Revenue Saleem Mandviwalla said, “Sindh government has not shown any interest in acquiring the PSM, as the statements of some leaders were political issue”. The Sindh government believed that PSM’s land belongs to the province, which should not be used for other purpose, he remarked. Minister of State for Privatisation said that Pakistan Steel Mills is established at 4500 acre of land, while total land belongs to PSM is 19000 acre. The proposed privatisation structure does not include 14500-acre land, which is outside the premises of the mill building.

Senators have asked the government to make PSM functional before going into its privatisation, otherwise government would not generate handsome money by selling it in existing state.

Talking about the privatisation of PIA, Mohammad Zubair said that Corporation is facing significant liquidity concerns because of the incurring continuous losses since 2005. PIA incurred a net loss of Rs32.22 billion by the end of fiscal year 2014, resulting in accumulated losses of Rs226.84 billion. Similarly, total liabilities of the PIA stood at Rs295.5 billion as at FY2014, out of which Rs161.35 billion represents borrowing.

The committee was informed that PIA has also facing overstaffing issues; it has 4.4 times more staff for running its operations than the other airlines. There are 596 employees on a PIA aircraft as compared to only average of 35 of other planes. “The issue is not of quantity, but it is of quality,” Zubair said and added that 60 percent of the 14,566 employees are below Matric (SSC level).

The Senate Standing Committee on Finance and Revenue once again constituted a sub-committee under the head of Senator Kamil Ali Agha to investigate the failed attempt to privatise the Heavy Electrical Complex. The Senate’s body had already constituted a committee to probe the aforesaid matter, but the committee was lapsed. The government has scrapped the sale deal of Heavy Electrical Complex (HEC) in June this year after failure of Cargill Holdings to deposit the due amount of Rs225 million into the national kitty. The Privatisation Commission has forfeited Rs250-million earnest money deposited by the Cargill Holdings that had purchased the HEC.

The Senate’s body also showed serious reservations over the increase in smuggling in the country, which is going unchecked as government failed to control it. Chairman Federal Board of Revenue Tariq Bajwa said that Board has seized goods of Rs 24.485 billion during the fiscal year 2014-15 under its nation-wide anti-smuggling drive. The FBR had seized Rs7.4 billion in 2013-14, Rs5.3 billion in 2012-13 and Rs4.9 billon in 2011-12. “There is no exact number of smuggling available with the FBR. We are working on a study, which would estimate the smuggling figures,” he added.

Tariq Bajwa admitted that Afghan Transit Trade is the main reason behind smuggling. He said that Pakistan had asked the Afghanistan to collect their Customs duty at Karachi port, which could control the smuggling. The Afghan government has shown positive response on our demand, he maintained.

Chairman FBR said Pakistan and Afghanistan have agreed to officially launch electronic data interchange (EDI) by January next year, which will help in documenting and regulating the transit trade cargo. He further said that FBR has shortage of customs enforcement staff.