Pakistan Steel Mills (PSM), facing an unprecedented liquidity crunch, has sought an advance loan of Rs 1.8 billion from National Industrial Parks (NIPs) under the guise of PSM Downstream Industrial Estate DSIE, Sector-III, fearing that the Rs 20 billion announced bailout is not likely to materialise, sources in PSM told Business Recorder.
Minister for Industries and Production, Shahzada Ahsan Afzal Sheikh, who reportedly is deeply concerned about PSM, was briefed about the DSIE particularly about its Sector-III which is undeveloped due to paucity of funds as PSM is facing the worst financial crunch of its history.
DSIE Sector-III has got 355 acres of undeveloped land out of which 50 acres has been allotted to M/s Aisha Steel Mills; 203 acres of land is planned to be divided into 102 industrial plots of 1, 2 & 5 acres, and the remaining 102 acres are meant for infrastructure. The design for development of Sector-III has been carried out by M/s Nespak.
According to sources, Pakistan Steel received 77 applications for allocation of land in DSIE Sector-III from October, 2006 to September 2012 out of which 25 applicants have so far provided feasibility reports requiring 156 acres of land from the available 203 acres meant for industrial plots.
Out of Pakistan Steel land, 930 acres of land was handed over in July 2007 to M/s National Industrial Parks (NIPs) Development Company Ltd as per GoP instruction for development and growth of industries. NIPs has a head start in this area and has now received funds from parent company PIDC for development works.
Since PIDC and Pakistan Steel are working under the same ministry and in the light of briefing to the minister, PSM has requested for provision of an advance amounting to Rs 1.8 billion by PIDC for development of DSIE Sector-III on profit sharing basis. PSM argues that it will provide opportunity to Pakistan Steel to develop industrial plots for allocation to applicants thereby generating funds for PSM exceeding Rs 2.5 billion.
“Repayment of advance extended to PSM for development of DSIE sector-III shall start after development and allocation of land to applicants which will take a period of two years,” the sources maintained.
Terms & conditions of the repayment advance are suggested as one of the following: (i) the advance will be returned on profit sharing basis to be earned on sale of plots after development of BSIE Sector-III for which applications are already available and allocation of the plots will be made to the interested parties after reconfirmation of their interest. The ratio of profit sharing is negotiable in consultation with Ministry of Production. Or (ii) the terms & conditions of the advance could be on the same pattern as were agreed by PIDC with M/s NIPs.
According to Sui Southern Gas Company (SSGC), outstanding amount against PSM is Rs 14 billion whereas the latter maintains that the amount is not more than Rs 13 billion. SSGC had served gas disconnection notice to PSM for March 26, 2013. PSM”s representatives arrived at SSGC office on March 25 and requested for review of disconnection notice which the gas company entertained.
