After the approval of bailout package, procurement of raw material will be the top priority of Pakistan Steel Mills (PSM), enhancing its production and minimising losses. Under PSM”s restructuring plan, the Economic Co-ordination Committee (ECC) of the cabinet on Tuesday approved a bailout package of about Rs 14 billion for the cash strapped state-run steel producer.
Talking to Business Recorder PSM”s CEO Major-General (Retd) Mohammad Javed welcomed ECC”s decision and expressed the hope that the package would help put the ailing public sector entity on track to recovery if the approved amount was sanctioned in a timely manner. Although, the ECC endorsed the bailout package for PSM, it needed another approval of the cabinet “and hopefully, they will give the approval soon”, the PSM CEO said.
At present, PSM owed billions of rupees to various entities, including Sui Southern Gas Company Limited, besides needing to repay bank loans. However, he said, procurement of raw martial would be PSM”s top priority to enhance its production, adding that funds would be used to pay liabilities, besides opening new letters of credit for importing raw material.
“Pakistan Steel is facing a serious shortage of raw material. The depletion of basic raw material resulted in a massive drop in production. Therefore, the package will initially be used for the procurement of raw material from domestic resources as well as import from neighbouring countries,” CEO said. He said that an amount of Rs 2-3 billion would be spent on import of iron ore, lamp ore and coal to increase PSM”s production, which was now running at less than 15 percent of its original capacity, he added.
“We are expecting that with the availability of raw material, production will improve. We expect the production capacity to rise to 50-60 percent during the current fiscal year,” he said. Pakistan Steel is currently facing a loss of Rs 1.5 billion per month because of operating below optimum production level. Production losses could be reduced even if the production reached at least 50 percent of its capacity.
In addition, PSM still had to pay salaries of June this year. It also need to pay a huge amount to SSGC, pending for a long time, besides repaying its bank liabilities. He said that although the bailout package would be received in instalments, but “we are hopeful that the money will be disbursed in a timely manner and as per requirement of the mill”.
Talking about the dealers” boycott, he said that the National Accountability Bureau (NAB) was issuing notices in the light of the Supreme Court orders, which directed the anti-corruption watchdog to investigate and recover losses of PSM. However, PSM”s management was co-ordinating with NAB as well as dealers to resolve the issue.
“NAB”s inquiry is very focused and they are working in a proper manner in accordance with the Supreme Court”s orders. I personally met the DG NAB and he assured me of a transparent investigation,” the CEO of PSM said. About the salary issue, he said that funds were being arranged to pay salaries and it was expected that June”s salary would be paid soon.
Copyright Business Recorder, 2012