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ISLAMABAD: A government team is expected to leave for China on Sept 6 to launch soft marketing for the strategic sale of Pakistan Steel Mills.
The initiative has been taken at a time the PSM has been on “zero production-heat mode” for about three months because of gas pressure reduction by the Sui Southern Gas Company (SSGC) for continuous defaults.
Besides, K-Electric has issued a power termination notice to the Mills. According an official, the deadline for power disconnection has already expired and the PSM cannot internally generate enough energy required to keep its processes even on the heat mode.
Sources said financial advisers appointed by the Privatisation Commission for the sale had submitted their report, which would be taken up by the PSM management and Privatisation Commission. The matter would be under discussion at the level of Finance Minister Ishaq Dar almost on a daily basis this week.
A delegation of the Privatisation Commission headed by its chairman Mohammad Zubair plans to visit China for road shows to generate market interest before the launch of formal privatisation process.
The sources said that the advisers had expressed serious reservations over PSM’s current management structure and internal controls, business model, processes and production line and also over operation and maintenance of plants and machinery.
PSM chief retired Maj Gen Zaheer Ahmed Khan is learnt to have reported to the federal government that SSGC’s senior management was not ready even to meet the financial team of the mills to work out a future payment schedule.
The SSGC management had indirectly told the PSM management that it would not restore gas pressure unless the matter of outstanding bills was settled through transfer of PSM land to SSGC for Rs36 billion arrears and written instructions were issued by the petroleum ministry for gas restoration.
On the other hand, the Economic Coordination Committee of the cabinet headed by the finance minister has so far avoided the issue of a fresh bailout package for PSM to enable it settle matters relating to utility bills and payment of salaries.
In the process, the country’s largest integrated industrial unit has a major setback and lost one of the critical equipment costing Rs4bn. Over the past fortnight, the PSM has thrice cut its product prices by Rs7,000-10,000 per ton to offload Rs9bn worth of its inventory to compete with dumped Chinese products.
It still has a product stockpile of over 32,000 tons as dealers are staying away because of PSM cases pending with the National Accountability Bureau and Federal Investigation Agency.
Ironically, one of the coke oven batteries has also been on heat mode since November 2010 and the blast furnace of gas plants since June this year. The PSM said the condition of equipment had worsened because wear and tear owing to drop in gas pressure, resulting in stoppage of boilers of thermal power plant and consequently affecting other critical processes of the equipment because of non-availability of steam.
The NAB and FIA had been ordered by the Supreme Court to complete investigations into corruption and mismanagement when PSM’s total losses and liabilities stood at Rs22bn.
The losses and liabilities, according to the sources, have exceeded Rs300bn and even the forensic evidence has been compromised.
Published in Dawn, August 31st, 2015
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