ISLAMABAD - The government plans to complete the privatisation of Pakistan Steel Mills (PSM) in the next six months as the mill is not operational since June last year due to suspension of gas supply.

The Cabinet Committee on Privatization (CCoP) in mid July decided to go ahead with the privatisation of the PSM after Sindh government showed no interest in acquiring the mill. The government is looking for foreign investors for privatisation of the PSM.

“The privatization of PSM is underway. The mill was offered to the government of Sindh in October 2015 with all its assets and liabilities. However, despite a lapse of 9 months, the government of Sindh failed to respond to the offer. Accordingly, the federal government has now decided to revoke its offer and to proceed with the privatisation of PSM. It is expected that the privatization of PSM shall achieve closure over the next 6 months,” said an official statement issued by Privatization Commission.

Pakistan had missed the IMF deadline for privatizing PSM by June 2016 due to the differences between the federal and Sindh government on privatisation process. It is worth mentioning here that PSM is not functional since June last year due to the suspension of gas supply as it had defaulted on payments (currently approximately Rs41 billion) to SSGC.

An official of the privatization Commission informed The Nation that losses and liabilities of the country’s largest industrial unit have reached Rs400 billion. The government is paying salaries to the PSM workers from its own resources. The Economic Coordination Committee (ECC) of the Cabinet in June approved two-month salaries for the mill’s workers, as these were overdue from February to June 2016. The government has a plan to layoff daily wagers and contractual employees to bring down the expenditures incurred on salaries, the official documents showed.

The incumbent government believed that it has taken measures to revive the PSM. The PC statement stated that present government inherited Pakistan Steel Mill (PSM) with an accumulated liability of approximately Rs 125 billion and capacity utilization of almost 0 percent in 2013, despite PSM having been given approximately Rs 50 billion in the form of bailout packages between the years 2008-2013.

Given the poor state of the mill, the present government continued to support PSM and approved a bailout package amounting to Rs18.5 billion in April 2014, with a view that at the time of privatization, PSM shall be in an operational condition. A clear commitment was also made by the then PSM management that through this bailout package, it would become operational and not remain a financial burden on the GoP in future. However, PSM failed to achieve the desired capacity targets even after exhausting the entire amount of the bailout package.

Despite the failure, the GoP continues to support the PSM employees on humanitarian grounds to the extent of their salaries.