Ministry of Industries and Production has restarted work on a new bailout package of billions of rupees for the Pakistan Steel Mills (PSM) in consultation with the senior officials of the entity including Wasif Mehmood, former Acting CEO of the Mills. “I am working on new bailout package for the PSM which will be submitted to the federal government for approval,” said Shafqat Naghmi Secretary Industries and Production in a chat withBusiness Recorder on Thursday.
Former caretaker minister for Production and former chief executive officer Major General Muhammad Javed (Retd) made all out efforts to get a bailout package of Rs 11 billion for PSM but his efforts were wasted when the caretaker Prime Minister backed out after giving his approval, saying that the case should be placed before the next government.
“In view of the continuing financial constraint faced by PSM, the Government was requested for bailout package. The Government, on May 8, approved a one go bailout package of Rs 11 billion through a consortium of banks led by NBP and additional Rs 3 billion L/C facility from NBP. However, no fund have so far been released due to which PSM is not in a position to pay the salaries and even current bills of SSGC and KESC, who are threatening to cut off the gas/electricity supplies in case payment is not made immediately. Executive Committee of Management (ECM) Committee is of the considered opinion that in such an eventuality ie curtailment/stoppage of these supplies, the situation can cause irreversible damage to the plant and machinery resulting in huge and incalculable losses in billions of rupees,” ECM Committee observed. ECM also observed that the prices of raw materials such as iron ore and coal were falling steadily on the international market. The continued delay in release of funds “is preventing PSM to benefit from the prevailing rock bottom prices of iron ore and coal.”
ECM resolved that the Government should “intervene and order immediate release of funds against the current bailout package to avert the present crisis, which would be a national catastrophe if PSM is forced to shut down its operations due to stoppage of gas and electricity as is being threatened by SSGC and KESC. Besides, the social cost of stoppage of PSM operations will be tremendous resulting in unrest among the affected work force.” Electricity was restored after PSM submitted cheques to KESC clearing back dues however informed sources revealed that cheques were not dated and KESC might disconnect at any time.