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Govt bars PSM from seeking funds for revival

Govt bars PSM from seeking funds for revival

ISLAMABAD: The Privatisation Commission on Friday barred the management and board of directors of Pakistan Steel Mills (PSM) from seeking Rs30 billion for the revival of the country’s largest unit and asked the Ministry of Industries to look into the PSM matters directly.

In a rather hard-hitting letter, the Privatisation Commission also accused the PSM management and its board of violating the decisions of the Economic Coordination Committee (ECC) of the Cabinet and failing to “rationalise PSM employees”.

The PC that has been exercising greater say on matters pertaining to entities on the privatisation list said unless the PSM staff was rationalised the commission would go against releasing salaries to the employees, outstanding for three months now.

A former chairman of PSM, who ran the entity in profits, told Dawn “there is no problem with the [PSM] machine even today as reported by technical advisers. The problem lied with the man behind the machine, starting from the federal government to the CEO and it appeared all efforts are geared towards selling PSM as a dead asset”. He reminded that gas supply to PSM was stopped in June last year when it increased production to 65 per cent from 6pc.

Secretary Privatisation Sardar Ahmad Nawaz Sukhera said the ECC had directed the PSM management on Jan 29, 2016 to rationalise its employee’s strength, especially contractual and daily wage employees, considering the mill has been non-operational since June 2015.

On Feb 16, 2016, the PC asked the PSM management to take a few actions before any further summary for the release of salaries. These actions required the PSM board to justify the retention of total number of regular as well as contractual and daily wage employees despite its closure and also confirm reasons for not appointing a regular Chief Financial Officer (CFO) to date.

The PSM board was also required to endorse the future salary bill of its employees (regular, contractual and daily wage) essentially required to operate a closed mill after verification by the PSM board audit committee.

Moreover, in view of the fact that PSM is not operative due to closure of gas supply, the PSM board should also review options available under the “Pakistan Commercial and Industrial Employment Ordinance 1968” and a decision be submitted to the board.

In this regard, an agenda of the board HR committee was received on Feb 28, 2016, intimating of a meeting scheduled on March 4, 2016, after which the PSM board meeting was scheduled with a 20-point agenda.

“The agenda contained no information on rationalisation of employees and instead a proposal requiring additional funds amounting to Rs30bn for capital repairs of PSM and revival of the plant to 1.5 million tonnes per year”.

The secretary PC said he wrote on Feb 29, 2016 to the PSM management with “clear direction for preparing the working paper in light of the ECC decision, for the board HR committee to deliberate upon”.

Additionally, it was also conveyed that the consequences of any further delay in the implementation of the above directive shall lie on the PSM management. Again, on March 1, the CEO of PSM was asked “to prioritise and limit the agenda of the PSM board to 10 items at maximum for a more meaningful contribution by all members, and to send the same at least seven days in advance for the members to study and prepare for the same”.

On March 22, 2016, the PC has again received a working paper containing no information on rationalisation of PSM employees, while it contained a proposal for additional funds amounting to Rs30bn.

“Despite repeated requests to address the main issue of employees rationalisation, the PSM management has repeatedly been sending working papers for the restoration of gas supply and additional funds amounting to Rs30bn without realising that only recently it has failed to achieve the capacity utilisation target of 77pc as committed” under the bailout package of Rs18.5bn approved by the ECC in April 2014”.

“I regret to state that the behaviour of the PSM management leaves much to be desired, given its burden on the national exchequer,” said the secretary PC. Additionally, it is also causing unnecessary delay in the release of salaries of the PSM employees and this is bound to cause embarrassment to the government.

In light of this, “may I request you to kindly look into the affairs of PSM personally and direct them to proceed on a war footing in accordance with the directions of the ECC and the directions given to them,” concluded Mr Sukhera.

Published in Dawn, March 26th, 2016

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