PSM will be offered to Sindh government
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ISLAMABAD: The Cabinet Committee on Privatisation (CCOP) decided on Friday to offer the Pakistan Steel Mills (PSM), along with all its assets and liabilities, to the Sindh government, which had conveyed its interest to acquire the organisation.
The committee approved the transaction structure for the only integrated steel plant of the country with a production capacity of 1.1 million tons per year, expandable up to 3m tons. The PSM, set up in 1984, has a workforce of 15,274 and comprises 20 industrial units.
Also read: Rs90bn investment limit set for Pakistan Steel buyer
The Privatisation Commission Board had approved the transaction structure on Thursday and financial advisers have already been appointed.
The commission held road shows in China last week for privatisation of the PSM, signalling the government’s intention to explore Chinese interest if the deal is not struck with Sindh.
According to sources, the Privatisation Commission will send an offer letter to the Sindh government.
The commission’s Chairman, Muhammad Zubair, left for Karachi on Friday and is expected to meet Sindh government officials to discuss issues related to the PSM. He is likely to emphasise that the objective is to improve efficiency and profitability.
Last week, the Economic Coordination Committee approved Rs960m for the PSM to enable it to pay two months’ salary to employees. The PSM was unable to pay the wages because of ongoing losses.
ELECTRIC COMPANY: The CCOP, in its meeting chaired by Finance Minister Ishaq Dar, also approved the transaction structure for the Faisalabad Electric Supply Company (Fesco), providing for 74 per cent equity sale.
The transaction structure had been presented to the CCOP last month and after considering the recommendations of the Privatization Commission it had formed a committee to examine the proposal related to valuation of assets. The committee submitted its recommendations and CCOP approved the transaction structure.
Published in Dawn, October 3rd , 2015
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Comments (32) Closed
Oct 03, 2015 07:42am
Can't we find able technocrats to run these government owned corporations... Government should not privatize strategic assets (family silver) which serves as a buffer to counter inflation and unemployment… selling them will only get you peanuts out of them... just eradicate corruption and political interference from these entities and make them viable…
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Oct 03, 2015 08:35am
An extremely ill advised move, given the reputation of the Sindh government.
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Oct 03, 2015 08:42am
Sindh Governnent is the best option for owning and managing PSM.We have full confidence in the capabilities of the captain Mr Qaim Ali Shah.
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Oct 03, 2015 08:45am
Normally, I would not support privatization. But in Pakistan, government owned enterprises re often synonymous with failed cronyism and nepotism. Privatization, if done correctly, can solve that.
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Oct 03, 2015 08:47am
PSM will undoubtedly disappear within a year it is handed over to Sindh government. Do the people taking such big decisions have any common sense???
Sindh government is not capable of running simple, day-to-day affairs, and still the federal government wants to give PSM to Sindh!!!!
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Oct 03, 2015 08:51am
PSM was making profit until PPP's government was formed in 2008. The solution to PSM's woes is to have a competent management and no political interference.
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Oct 03, 2015 09:01am
It is being given from 'bad' to 'the worst'.
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Oct 03, 2015 09:09am
Why can't Pakistan Govt Can't manage small mills with only 1.1 Million Tonnes Capacity plants?
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Oct 03, 2015 09:29am
Is Sindh govt not part of Pakistan Govt? To even consider this is absurd. Sindh govt runs on tax-payers money. Why or how on earth would they be qualified in any way to run something federal govt could not run successfully and that has been nothing but a pit for tax money and a place to park political hires. It's like a bad dream. Has Supreme Court not stopped the privatisation in Musharaff time the people of Pakistan would have saved hundreds of billions of rupees that have subsequently been put into the deficits of this white elephant.
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Oct 03, 2015 10:15am
@anees from zaida Well its good for the federal govt bad for the sindh govt!
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Oct 03, 2015 10:20am
Sindh govt cannot run Sindh. How are they going to run PSM ? Very bad move. Privatization is the answer.
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Oct 03, 2015 10:41am
Better federal should retain the PSM and ask the Russians who build it for help in making it a profitable organization, and not to go for ill advised decision, its a national assesst which must be protected and above the only steel mill of this capacity in the country. Think and think the future lies with it, no hasty decision.
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Oct 03, 2015 10:44am
Why always disastrous moves to rescue dying organizations.Are there no honest capable persons in Pakistan to bring it up?
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Oct 03, 2015 10:56am
When the Federal government could not run the mills, how can any sane mind expect that it can be operated any differently under the PPP government in Sindh. The PPP governments of 1993 and 2008 were primarily responsible for bringing Pakistan Steel to its present pitiable state.
Another pertinent point is from where will the Sindh government cough up Rs. 90 billion to pay for the minimum sale price set by the Federal government for 51% shares of Pakistan Steel? Furthermore, how will the Sindh government manage the billions required every month to operate the mills?
With different party governments at the centre and in Sindh, there will always be the dispute about the fiscal measures, which is a Federal subject. With a PPP backed workers' union (CBA) at the mills, how can the Sindh government stand up to its unreasonable demands?
The proposal is a non starter and is doomed to fail. It will only expedite the demise of the mills. The Federal government clearly wants to dump the mills.
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Oct 03, 2015 11:17am
@Ahmed USA you prefer the Soviet model?
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Oct 03, 2015 12:03pm
In other words to Mr Asif Zardari.
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Oct 03, 2015 12:06pm
Is this the result of Dr Asim's interrogation? Please clarify or is this 50/50?
Thank you.
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Oct 03, 2015 12:24pm
If this is true, then of course, PSM will exists for further 1 year only provided the known efficiency of sind government.
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Oct 03, 2015 12:26pm
No it's not government job Is to run the city place whatever not to do business
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Oct 03, 2015 12:30pm
Government is not business and we don't live in communist era business is done by business men or there is always corruption still mill must be sold has to be sold it's such a lucrative company that is strangled with corruption
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Oct 03, 2015 01:59pm
@M Jamal You must be kidding.How can an industrial entity, which could not be managed by relatively powerful& resourceful federal government,be managed by Sindh province which has ,reportedly,the worst track record of managing its own affairs. No sir! Sindh has a peculiar rural-urban political setup that is not conducive for its government to indulge in industrial ventures.Besides, governments are not supposed to run industries;it is private sector's function;public sector is there to deliver essential/basic public services & to regulate private sector.
It is amazing to note that on one hand, NAP is rightly targeting Sindh in connection with mis-governance-in relation to terrorism- & ,on the other,PSM is being offered to them.
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Oct 03, 2015 02:25pm
Here is an idea, make a Chinese company 25% partner of PSM, rest sell 24% stake to public via stock market(after Chinese company has taken control and finances improve so public has some confidence) and the remaining 51% stay with government.Also, fire 80% of the staff and only keep 20% top performer which will be judged by their performance.After, cleaning up old staff, start new hiring where you hire people(include Chinese) who worked in large steel mills across the country or international. That way company might make some progress. The PIAA can't go that way because it is already in KSE.Also, try to make private companies partner of the PSM.
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Oct 03, 2015 03:05pm
This is simply transfer of responsibility from Federal to Sindh. There is more that what is being disclosed here. Another muk muka!
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Oct 03, 2015 03:37pm
@M Jamal , You are joking about CM SINDH, it is known to every one about his caliber and his corruption.
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Oct 03, 2015 03:51pm
@M Jamal Like corruption and incompetence
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Oct 03, 2015 05:06pm
@Khara aur karwa such
On second thought, a very smart move by PML-N coterie.
Judging that it could not make any money out of PSM's privatization transaction in view of PPP's declared policy to strongly oppose any such move, PML-N leadership decided to kill two birds with one stone.
Firstly, taking advantage of the jiyala's chant that Pakistan Steel was the proud legacy of Z. A. Bhutto and his gift to the nation, and also cognizant of the fact that its privatization under PML-N government would not go well with the people of Sindh, the government decided to present PPP with Hobson'choice : if you take it, you are doomed because you would not be able to run the mills with its very heavy baggage, and if you refuse the offer, you attract the ire of the jiyalas because the mills would close down anyway.
Secondly, in case the Sindh government agrees, PML-N would be absolved of the responsibility of expending huge amounts on continued payment of salaries and perks to an idle work force.
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Oct 03, 2015 05:34pm
Fall from sky and stuck up on date tree..Instead of giving away this precious asset to Sindh Government give it to M/s Arif Habib & Riaz Mullick jointly,with some conditions that they will pay in installments,etc.But this asset should not be given or offered to Sindh Government under any circumstances .
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Oct 03, 2015 07:33pm
The joke that hurt :
Privatization Commission Chairman is expected to emphasize on Sindh government officials that the objective (of offering PSM to Sindh government) is to improve (its) efficiency and profitability.
By Privatization Commission's assessment, duly endorsed by the government of Nawaz Sharif, the Sindh government has emerged as a model of efficiency.
Rangers! Shouldn't you review your earlier remarks about the Sindh government being corrupt and inefficient?
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Oct 03, 2015 08:30pm
Here is the sad reality. In order to turn PSM around, massive layoffs of incompetent as well as ghost employees will have to be undertaken -- which will trigger protests. That's the key issue with all state-run industries. You can't run private organizations efficiently and also get votes.
Privatization is the only option to avoid outright shutdown.
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Oct 04, 2015 06:19am
Oh, wow, go ahead PPP Sindh government! continue with another great opportunity to loot and plundering of national assets. we can't find any honest and God-fearing technocrat to run PSM and make it profitable with China's assistance?
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Oct 04, 2015 06:29am
@Ahmed USA, are you asking the corrupt politicians to do this ?
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Oct 04, 2015 08:20am
If. Pakistan Steel is handed over to the Sindh government, the new owner would be restrained under the terms of sale not to lay off any employee for at least two years. After that, all employees possessing domiciles of other provinces may be laid off by the Sindh government - another negative aspect of this proposal.
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