Pakistan Steel Mills: A story of incompetence and failures

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Pakistan Steel Mills: A story of incompetence and failures

ISLAMABAD: (APP) The Privatization Commission (PC) has clarified a recent statement made by Chairman Senate standing Committee on Finance Senator Saleem Mandviwalla wherein he has stated that "the Government has destroyed Pakistan Steel Mills (PSM) instead of reviving it has closed it forcibly, which is an economic terrorism".

The statement is factually incorrect, said a press release issued by the Privatization Commission here on Friday.

The present Government inherited PSM with an accumulated liability of approximately Rs 125 billion and capacity utilization of almost 0 percent in 2013.

Despite PSM having been given approximately Rs 50 billion in the form of bailout packages between the years 2008-2013 Given the poor state of the mill, the present government continued to support PSM, it added.

It further said that government also approved a bailout package amounting to Rs 18.5 billion in April 2014, with a view that at the time of privatization, PSM shall be in an operational condition.

A clear commitment was also made by the then PSM management that through this bailout package, it would become operational and not remain a financial burden on the government in future.

However, PSM failed to achieve the desired capacity targets even after exhausting the entire amount of the bailout package.

Despite the failure, the government continues to support the PSM employees on humanitarian grounds to the extent of their salaries.

It must be noted that the closure of the mill is not because of the government but because of PSM's inability to convert the bailout into becoming an operational unit and also its constantly defaulting on payments to SSGCL, which now amounts to approximately Rs 41 billion.

In the meantime, the privatization of PSM was also underway. The mill was offered to the Government of Sindh in October, 2015 with all its assets and liabilities.

However, despite a lapse of 9 months, the Government of Sindh failed to respond to the offer. Accordingly, the Federal Government has now decided to revoke its offer and to proceed with the privatization of PSM. It is expected that the privatization of PSM shall achieve closure over the next 6 months.

The government even today continues to support the employees of PSM and endeavors to turn it into a production unit once again, it added.