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Prime Minister to visit PSM today




  • Prime Minister Raja Parvez Ashraf will visit Pakistan Steel Mills (PSM) on Thursday where he will be given a detailed briefing about the affairs of the mills which sustained Rs 21.343 billion losses in 2011-12, well informed sources in PSM told Business Recorder. The Prime Minister will be briefed by Chief Executive Officer (CEO) Major-General Muhammad Javed (retired).

    PSM’s accumulated losses are Rs 74 billion while its outstanding liabilities are Rs 76 billion. Insiders claim that main purpose of the Prime Minister’s visit to PSM is to support the PPP workers’ union, as the incumbent government confirmed about 5,000 workers on political grounds. Incumbent Minister for Production Anwar Ali Cheema also inducted 500 loyalists through a third party. CEO PSM apprised the Prime Minister that a revised business plan for 2012-13 was submitted to the Cabinet Committee on Restructuring (CCoR) in June this year.

    In the business plan it was pledged that PSM will endeavour to reach break-even level of production during the last quarter (April to June) 2013 with the planned capacity utilisation of 55 percent during 2012-13, subject to timely release of Rs 14.6 billion as per schedule agreed by the CCoR. The sources said Chairman Collective Bargaining Agent (CBA), Shamshad Ahmad Qureshi also requested Prime Minister for separate grant of Rs 5.24 billion of which Rs 2.5 billion is for CBA whereas Rs 2.74 billion is for officers’ salary. Economic Co-ordination Committee (ECC) of the Cabinet has approved financing facility of Rs 14.6 billion for the PSM subject to “submission of quarterly performance indicators to government against this facility”. The overall production of raw steel during 2011-12 was 204,061 tons or 19 percent capacity utilisation, instead of 396,104 tons or 36 percent during 2010-11.

    Production decreased mainly because of limited availability of iron ore and coal and liquidity crunch. Net sales achieved during 2011-12 amounted to Rs 14.99 billion as compared to Rs 26.298 billion in 2010-11. Procurement of imported raw material was at much higher prices (cost & freight) than the prevailing spot rates because Pakistan steel was bound to procure their material through long term supply contracts. During the current year, due to financial crisis, PSM continued to suffer losses because of non-availability of required funds for purchase of raw materials and its capacity utilisation was as low as 15% during the months of May and June 2012. The CCoR, in its meeting held on June 28 this year, agreed on achieving average capacity utilisation of PSM of 50-55 percent for the year 2012-13.

    During the meeting, funding requirements of PSM amounting to Rs 14,600 million to achieve an average capacity utilisation of 50 percent during 2012-13 were discussed in detail. The restructuring committee also agreed to provide Rs 1 billion to PSM as interest-free loan by GoP as a special case to clear SSGC’s previous liabilities and directed the Ministry of Production to seek the approval of ECC for commercial funding of Rs 8.6 billion including mark up for FY 2012. Besides, the CCoR approved the funding requirement of PSM amounting to Rs 14,600 million to be made available on quarterly basis as follows: July 2012 -Rs 4,100 million; October 2012 -Rs 5,350 million; January 2013 -Rs 3,000 million; and April 2013 -Rs 2,150 million.

    Copyright Business Recorder, 2012

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