The federal government on Tuesday rejected Rs 18.6 billion bailout package prepared by a three-member committee for the ”sinking” Pakistan Steel Mills. It decided to chalk out a plan for its privatisation, sources close to secretary industries told Business Recorder. The decision was taken at a meeting of the PSM Board presided by the Secretary Industries and Production Shafqat Naghmi.
A three-member committee comprising Shah M Saad Hussain, Asad Ali Khan and Engineer Abdul Jabbar Memon has been directed that two plans may be prepared for privatisation of the entity within two weeks, ie, the PSM privatisation on as is where is basis as well as restricting the plan till its privatisation.
“The steel mill”s revival proposal has been rejected by the board as the entity is being prepared for sell-off as per the agreement with the International Monetary Fund,” the sources added. The board has also decided that accounts of the PSM be audited immediately to evaluate its financial health as the liabilities have already accrued to Rs 102 billion.
The board directed the three-member committee to work out a mechanism for Voluntary Separation Scheme (VSS) and its cost and how the government will pick up this financial burden in case of privatisation. The committee will also submit a mechanism regarding restructuring of the mill till privatisation which will take at least 18 months. “The PSM Board will approve the privatisation and restructuring plans prior to submission to the federal government,” the sources added.
The board has allowed the PSM management to examine the offers of three private sector parties which have offered raw material against finished products but refused to give sovereign guarantee. Three private sector parties – M/s Stemcor, M/s Siddiq Sons and M/s Cargill have already submitted their proposals regarding financing of basic raw materials. The three members committee has considered private sector proposals and found them feasible for revival of the mills. The sources said the board has directed the PSM management to find out other channels for finalising arrangements with private parties. The sources said the board members voluntarily decided not to get Rs 20,000 as T.A from the PSM.