ISLAMABAD: The Pakistan Steel Mills (PSM) management has hinted at a conspiracy to fail the revival of the country’s largest industrial unit that is now on active privatisation list. It questioned why its gas supply was reduced when it touched new production milestones.

Speaking to journalists on Monday, PSM Chief Executive Maj Gen (retd) Zaheer Ahmed Khan complained of unfavourable treatment of PSM products by the government and discriminatory dealing of its gas bills as compared to private entities.

He said he was taking up the entire issue along with a request for Rs4.2 billion funds on account of salaries and working capital for four months to enable PSM to revive its production cycle that would result in 100 per cent capacity utilisation and restore repayment capability by October and enable the government to earn a better price through privatisation.

Ahmed Khan said K-Electric, despite being a private entity, was not served gas disconnection notice even though its outstanding gas bills exceeded Rs55bn compared with Rs35bn of PSM.

He said the PSM’s gas supply was first disrupted when its capacity utilisation reached 50pc in January without any reason and then again when it crossed 65pc capacity utilisation. “Was it a coincidence twice or deliberate?” he asked.

He said the Chinese steel firms were dumping products. He said while private and unregulated steel producers were protected with 15pc regulatory duty, the PSM was allowed 12.5pc regulatory duty protection, resulting in huge inventory build up of about Rs9bn.

The K-Electric, he said, caused 53 tripping in power supply in a month that damaged the machinery. Ahmed Khan emphasised 14,700 workers were dedicated and motivated though some of them were inducted on political basis.

He said the PSM was granted a bailout package of Rs18.5bn on April 25 last year when production level stood at 6pc with the commitment for disbursement of Rs12.5bn in first go, followed by Rs3bn each after six months and nine months to reach 77pc capacity utilisation of break-even seven months after receipt of materials.

Since the first disbursement did not include amount for iron ore import for three months, the 7th month of break-even was taken to April 2015. He said the same summary on which the ECC approved the bailout plan contained “caution clause” which said the each moth of delay in disbursement will entail an additional payment of Rs1.4bn to make up for the deficit resulting out of payment for salaries and working capital.

The same summary also approved that the “mark up and principal outstanding against national bank of Pakistan and SSGC may be frozen at least for two years and the principal repayment of the banks and SSGC should be rescheduled for 10 years and mark up and surcharge waived off. All this did not happen. He said a fresh investment of just Rs8bn could increase the plant capacity beyond 3 million tonnes to cater for upcoming huge demand of steel products for China-Pakistan Economic Corridor project and avoid loss of foreign exchange in import of such products.

Published in Dawn, August 11th, 2015

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