ISLAMABAD: As the government of Pakistan decides to lease out Pakistan Steel Mills (PSM) as the last resort, it has finalised plans to clear huge debts by selling out non-core land worth Rs 200 billion.
According to reliable sources, along with moving forward on privatising Pakistan International Airlines (PIA), the government has prepared a plan to settle the liabilities of Sui Southern Gas Company (SSGC) and National Bank of Pakistan (NBP) as well as to pay the gratuity and provident funds of the retired PSM employees through sale of around 900 acre land of the mills.
The government of Pakistan needed to clear liabilities worth Rs 180 billion in order to lease or privatise the mill, a plan has been finalised to generate around Rs 200 billion through the sale of the land by a new company which SSGC, NBP and PSM would be shareholders off. “Once the liabilities are settled, there will be buyers ready to own and run the mill,” said a PSM official.
“The PSM owns the precious land and there are at least 500 interested applicants. As per the estimates and after due concession the land would be available for the planned industrial park at the cost of Rs 200 billion,” said the official.
As per the lease plan of PSM, the number of employees will be reduced from 12000 to 5000 through offering golden handshake program, he said.
“The last meeting of Privatisation Commission of Pakistan has reached the conclusion that only leasing out or privatisation of PSM is the solution of the mill, which has been idle for the last two years,” he added.
The government plans to lease PSM for a 30-year term as interested bidders would present a comprehensive investment plan, sources said.
During a recent meeting of National Assembly’s Standing committee on Privatisation, federal Minister of Privatisation Daniyal Aziz had also claimed that the halted or delayed process of selling out of PSM and PIA would be accelerated.
According to sources, out of the total liabilities of over Rs 180 billion, PSM owed Rs54.8 billion to NBP and Rs44.5 billion to SSGC.
PSM has about 4,444 acres core land that will be given on lease to investors while the remaining 900 acres of land is proposed to be sold. The mill has been closed for about two years after the SSGC disconnected the gas supplies on non-payment of Rs 18 billion dues.
According to the proposal, the PSM will lease core assets to the investor including land, plant and machinery and building, yet no asset will be sold. All non-core assets will remain with PSMC which shall continue to manage them.
The investor will commit complete overhaul of steel mills operations to achieve 1.1 million tonnes per annum existing capacity in the shortest period possible. The investors will commit achievement of at least 50 per cent capacity utilisation at the end of two years and 85 per cent capacity utilisation by end of the first five years of the lease period.
