Pakistan spent Rs87.6bn in four years to ‘bailout’ PSM

ISLAMABAD: As the governments of Pakistan Muslim League Nawaz (PML-N) and Pakistan Tehreek-e-Insaf (PTI) have failed to decide about the fate of Pakistan Steel Mills (PSM), the country has borne over Rs87.6 billion for bailing out the dysfunctional mill in four years.

As the mill became completely dysfunctional in 2015, the salaries of thousands of employees and fixed overheads were being met through “bailout packages” from the federal government without any output from PSM.

According to officials of the Ministry of Industries and Production, the total bailout package given to the mill was worth Rs87.611 billion till October 2019.

Briefing National Assembly’s Standing Committee on Privatization, the ministry officials informed that PSM was at zero production level since 2015. “The accumulated profit of PSM till 2007-2008 was Rs9.54 billion but after that it started suffering losses and its production was suspended in June 2015,” they added.

The ministry representatives further said PSM was a public limited company with a production capacity of 1.1 million tonne per annum, adding that its total assets were Rs149 billion, total liabilities were Rs219 billion, accumulated losses were Rs207 billion while its net worth was Rs70 billion.

It was informed that the PSM has been placed on the active list of privatisation and that the appointment of a financial adviser has been approved by the Board of Privatization Commission.

According to documents, the mill’s management has not made any effort to recover Rs2.79 billion shown as taxes refundable on its balance sheet from the tax authorities. In addition to financial woes, the mill has continuously failed to recover around 344 acres of its township land encroached by various entities. The value of land has been estimated at Rs3.44 billion by the expert appointed by the Privatisation Commission.

Privatization/Commission Secretary Rizwan Malik apprised the committee that the First Women Bank Limited and the SME Bank would be privatised because the government has a fiscal deficit and there was no fiscal space. He said a strategic partner would be required for injecting capital, but the ministry assured that the special character, especially of First Women Bank Limited, would be maintained and majority employees would be protected.

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Ghulam Abbas
Ghulam Abbas
The writer is a member of the staff at the Islamabad Bureau. He can be reached at [email protected]
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