The Economic Coordination Committee (ECC) of the Cabinet convened inIslamabad on Tuesday. During the meeting, it was revealed that PakistanSteel Mill (PSM) has incurred accumulated losses of Rs 206 billion as ofJune 30, 2022.
Dr. Shamshad Akhtar, the Caretaker Federal Minister for Finance, Revenue,& Economic Affairs, chaired the ECC meeting. The Ministry of Industries andProduction presented a summary seeking approval for the projected netsalary payment for PSM employees in the Fiscal Year 2023-24.
PSM, a government-owned entity, has been accumulating losses since2008-09, reaching Rs 206 billion by June 30, 2022. Due to productionsuspension since June 2015, the government has been funding employeesalaries since 2013, and PSM lacks sufficient financial resources to coverthese costs.
To address this issue amid the privatization process, the government hasalready retrenched 5679 employees, with around 3100 currently employed.However, even with reduced salaries from Rs 360 million per month toapproximately Rs 104 million per month, PSM cannot meet this obligation.
The Ministry of Industry and Production requested ECC approval for aprojected net salary payment of Rs 1.24 billion for the Fiscal Year2023-24, sourced from the allocated budget of Rs. 10 billion. Afterthorough discussion, ECC authorized the Finance Division to approve thefirst 6 months’ projected net salary payments from the existing budgetaryallocation.
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Furthermore, the Ministry of Planning, Development, and SpecialInitiatives presented information on major economic indicators and foodprice trends. ECC instructed the Ministry of National Food Security andResearch to submit regular reports on staple item availability,consumption, and pricing, specifically for Wheat and Sugar.
ECC also directed the Ministry of Planning, Development, & SpecialInitiatives to control excessive profiteering and maintain pricetransparency between wholesale and retail prices of essential food itemsthrough collaboration with Chief Secretaries. Additionally, the Ministry ofEnergy discussed the transition from London InterBank Offer Rate (LIBOR) toSecured Overnight Financing Rate (SOFR).
IPPs and lenders have approached the Private Power and Infrastructure Board(PPIB) for this transition due to the discontinuation of LIBOR as abenchmark for financial transactions. ECC approved the proposal, with NEPRAworking on tariff determination/indexation mechanism amendments related toSOFR, effective from July 1, 2023. The Ministry of Energy was tasked withproviding a detailed financial analysis of this decision in the next ECCmeeting for discussion and approval.
