“We are also seeking funds of Rs 4 billion from the Prime Minister to run PSM,” the sources continued. The issues like reconstitution of the new Board will also come under discussion in the meeting as the incumbent CEO wants to get the powers of chairman of the board of directors which, according to the Finance Ministry, is against the Companies Ordinance and international best practices.
Former prime minister Raja Pervez Ashraf had reconstituted the Board on a summary of Ministry of Production, but it was not notified because of reported “cordial” relations between the PSM CEO and former Secretary Production. The sources said the PSM wants another package of Rs 36 billion from the federal government to attain ”CAPU” at 75 percent as early as possible. The package includes Rs 6 billion for building the supply chain, or Rs 11 billion for meeting working capital requirement, payment of Rs 5 billion of mark up by GoP or rescheduling of loans, restructuring of Rs 4.2 billion loan and deferment of Rs 11 billion SSGC payment.
The sources said, PSM, Hot Stri Mill (HSM) production was halted due to a spark in 6.3 MW electric motor of universal stand from March 25, 2013. Coke production at COBP is also very low due to shortage of coal. 14000 MT slabs are lying in stockpiles for rolling hot rolled products and PSM is suffering over a billion rupees revenue loss.
According to sources, Production Directorate informed PPC and Commercial Directorate that COBP will be halted if coal ship does not arrive before April 20. Sources revealed that coal ship 40,000 MT) may arrive by April 30. In last 60 hrs only two heats (200) steel was converted at SMD due to breakdown of converter while the second was on lining. PSM was a profit earning organisation from July 2000 to June 2008 but July 2008 to March 2013 the losses are more than Rs 90 billion + payable debt liabilities are more than Rs 98 billion.
PSM performance from July 2012 to March 2013 production attainment Capacity Utilisation (CAPU) was 14 percent and sales revenue is Rs 840 million per month and losses are more than Rs 20 billion in 9 months. Ad hoc injection of Rs 14.6 billion bailout package plus Rs 2 billion did not show any positive result.
During the period 2005 to 2008 when coke oven batteries were under repair, an amount of $450 million were spent on the purchase of 29 ships coke @ $125 PMT to $776 PMT alone which has not yet been investigated and may turn out to be another scam. Only one ship case has been registered by FIA. The sources further stated that coal stock exhausted due to delay in coal shipment and the normal coking period of the coke oven battery of 16 hrs was increased to 42 hours.
This has negative effect on the coke oven battery lining which also increases the M10 and M40 thus reducing the coke strength. The performance of Blast Furnace is affected because of this substandard coke the volume of BF hearth is reduced affecting the refractory lining and other chemical properties of hot metal. Both batteries have already been repaired and reconstructed in 2006, but due to violation of operational parameters a tender has been floated for repair of two batteries which were already repaired at a cost of Rs 500 million. Pak Steel paid additional Rs 3 billion on this account. This issue has not received any attention from the federal government.