ISLAMABAD: While the transaction advisers appointed for privatisation of Pakistan Steel Mills (PSM) have reportedly submitted their proposals, sources belonging to the steel industry have raised questions regarding the process of appointment of the advisers.
A steel industrialist while talking to Profit on the condition of anonymity, claimed that transaction advisers for privatisation of PSM on a public private partnership basis, have been appointed in a non transparent manner.
The industrialist said that instead of appointing a single qualified transaction adviser, the government has appointed a consortium of transaction advisers which includes multiple organisations. Some of the organisations are controversial while others lack experience pertaining to advising on highly technical projects like PSM.
The seven-member consortium includes Pak China Investment Company Limited (PCICL) as the lead of the consortium, Fergusons & Co, Cornelius, Lane & Mufti, Abacus Consulting, Sino Steel and Iqbal Nanjee & Co.
According to the steel industrialist, the transaction adviser should have been appointed in accordance with international law. He added that the transparent appointment of a single company having technical and commercial knowledge of PSM and its operations and processes would have been enough.
“PCICL is a Development Financial Institution (DFI) formed under the initiatives taken by the Government of Pakistan (GoP) and People’s Republic of China for the promotion of trade, investment and economic growth of Pakistan. The company is a joint venture in which equity is equally contributed by the GoP and China Development Bank,” he said.
“It is not in the scope of PCICL to act as a transaction adviser as it is already a Joint Venture (JV) partner of the GoP and any decision or advice coming it can favor the GoP or the Chinese government.”
According to sources, the inclusion of Sino Steel in the consortium, which is also a candidate for the acquisition of PSM on a public private partnership basis is also a controversial move.
The Privatisation Commission (PC) has shared the first draft of human resource, financial and tax due diligence with PCICL and the Bank of China (BoC) for the purpose of reviving PSM.
As of April 2020, PSM had provisional losses of Rs300 billion and payable debts liabilities above Rs280 billion.
Earlier while briefing a meeting of the Senate’s Standing Committee on Industries and Production, Federal Minister for Industries and Production Hamad Azhar also claimed that the steel mill would be run in collaboration with private partners adding that the bidding for a joint venture would be held later this year.
The minister for industries and production further said that out of the 12 international companies which expressed interest in PSM, six companies have already visited the steel mills. Hammad Azhar informed that some lands belonging to the steel mills were being leased out, adding that big decisions needed to be taken in order to make PSM self-reliant.
The minister further informed that Pakistan’s steel consumption stands at seven million tonnes adding that despite several steel mills being operational in the country Pakistan still imports iron and steel products to fulfill its demand.