PSM now a ''negative equity'' concern: minister

Federal Minister for Privatization Daniyal Aziz has said that sick public sector enterprises and entities, including Pakistan Steel Mills (PSM), are causing accumulative losses of over Rs 600 billion annually and the corporation like PSM has acquired the status of "negative equity." Aziz informed the National Assembly Standing Committee on Industries and Production on Thursday that the government has to get rid of institutions which are persistently causing annual losses to the tune of billions of rupees. The same amount could be spent on health, education and infrastructure development, he added.
The business community is well aware of the term ''negative equity'', which is the worst business condition of any entity or enterprise, he further said. He said that the government is fully aware of the problems of retired employees and widows of the late employees of PSM and an amount of Rs 322 million has been paid to the widows. He said the government would ensure speedy payment of the remaining amount to the widows. Priority has been given to the issues of the PSM. "A summary to Economic Coordination Committee of the Cabinet is required for payment of remaining amount, but at first we have to evaluate and quantify the exact figures," he said.
There is a need to work out the profile of all liabilities of the PSM for accurate assessment of the losses and liabilities. A liability settlement plan of the PSM is being worked out keeping in view the seriousness of the situation, he said. "We have the responsibility of payment of pending dues to the retired employees of the PSM, but at the same time we also have the responsibility to contain huge losses in the public sector enterprises. If anything has stopped Pakistan from turning into a Singapore or a Dubai, it is due to such huge losses in the public sector enterprises," he said.
Aziz said that a lease plan for the PSM would also be chalked out and past liabilities would be paid to the employees separately. MNA Qaisar Ahmed Sheikh informed the committee that privatization is their manifesto. The government is paying salaries to the PSM employees despite the fact that the factory has not been working for two to two-and-a-half years. Instead of improving its performance, the whole focus is on payment of salaries to the employees. A concrete decision is needed to be taken to resolve the issue of PSM, he said.
He said that the matter goes into billion of rupees due to discontinuation of production, increasing PSM liabilities and more importantly an increase in imports of steel products is causing impact on foreign exchange reserves. The government has been paying Rs 40-50 million salary bills on a monthly basis without taking any work from the workers, he added. Meanwhile, National Assembly Standing Committee on Industries and Production has recommended for directly sending a reference to the National Accountability Bureau (NAB) to investigate the matter of withdrawal of money of retired employees of the PSM without authorization. The NAB should also probe why SNGPL suspended supply of gas to the PSM in 2015.
"It is a criminal act to steal money from retirement funds of people. It is in black and white criminal case of using retirement funds without seeking approval," Asad Umar said. The committee directed the secretary committee to write letter to the speaker of National Assembly so that a reference could be sent immediately after seeking speaker''s approval.
"We have written to the Ministry of Industries to file reference with the NAB, but they refused. As per Ministry of Industries viewpoint, the affairs of the PSM as pointed out by the committee come exclusively under the policy domain of the government and in our considered view, they do not fall under NAB''s purview, thus in no way are they necessitating a reference to be sent to NAB," Ministry of Industries added. The CEO PSM informed the committee that the government has been paying salaries to the employees since July 2013 as a loan. The gratuity has not been paid since August 2013. The outstanding dues of employees are Rs 10.08 billion as on June 30, 2017 and the projected outstanding dues are Rs 15.82 billion as estimated for June 2018.
The CEO PSM said the gratuity funds withdrawals come to around Rs 3.6 billion and provident funds withdrawals stood at Rs 4 billion in 2008. After three withdrawals, when the issue was brought to the Board, it has not endorsed the said actions. Officials of Ministry of Industries informed the committee that the PSM has been facing severe financial crunch since the year 2008-09. As a result of which PSM has been paying net cash salaries to its employees and was unable to pay the Provident Fund dues after May 2015 and gratuity dues after April 2013 to the retired employees. Since then, the employees retiring from their services have been going home empty handed, as neither provident fund nor gratuity is being paid to them which is causing a serious social and financial issue.
The immediate payable liabilities to PSM employees as on June 30, 2017 included final settlement dues (payable salaries) to ex-employees. Final Settlement Dues (payable salaries) from November 2012, including leave encashment), are Rs 1,066.596 million; gratuity to ex-employees from May 2013, Rs 5,310.390 million; provident fund dues, Rs 4,429.588 million, and total payable to ex-employees was Rs 10,806.574 million as on June 30, 2017.
They said that both the provident fund (employee contribution and employer contribution) and the gratuity fund contributions have not been paid to their respective trusts by the corporation since 2008-09 and the accumulated payable amount on June 30, 2017 to the respective Trusts revealed a total amount of Rs 44,081 million.
Pakistan Steel Mills is on active list of privatization and it is the responsibility of Privatization Commission to settle the liability issue of PSM. The same fact has also been endorsed by Finance Division in its attached letter. The Ministry of Industries & Production on its part has been making continuous efforts since 2016 by approaching the relevant authorities of Privatization Commission and Finance Division for resolving the subject issue.
In the recent past MoI&P in connection with the liabilities settlement plan initiated by Privatization Commission and Finance Division has forwarded a complete data of PSM employees for making an arrangement to the outstanding payment accumulated on account of GP fund, gratuity fund and salaries in respect of the PSM employees, as well, the officials of Ministry of Industries added.
Standing Committee also discussed the implementation status on the recommendations of the Standing Committee on Industries & Production given in its meeting held on 13th July, 2017 regarding Pakistan Gems and Jewelry Development Company (PGJDC), Pakistan Stone Development Company (PASDEC), and recommended to invite representatives of Marble Association of Pakistan and State Bank of Pakistan to the next committee meeting.
The standing committee further discussed the matter regarding Al-Tawairqi Steel Mills Karachi, in response to a proposal for restarting Al-Tuwairqi plant in Port Qasim and recommended to follow up the said proposal. It was recommended that for the revival of the project of Tuwairqi Steel Mills, the 3rd summary of the MOI pending in the cabinet division since 20th November 2014 should be brought on the agenda of the ECC, the earliest possible, official of the Al-Tawairqi Steel Mills recommended.
In case of the approval of the recommendations of the MOI''s summary by ECC, sponsors of the project may be extended a formal invitation from an appropriate level to visit Pakistan as a confidence rebuilding measure. Needs no emphasis, the project of Tuwairqi Steel Mills was a showcase project for the sponsors both POSCO/Al-Tuwairqi and equally the financiers (a consortium of banks) led by ICD, the private sector arm of The Islamic Development Bank of Jeddah.
Sitting across the table with the sponsors and after demonstration of a concrete evidence regarding keen interest of the GOP to protect the interests of the foreign investors, we may lead to a way forward in an enabling environment, official of Al-Tawairqi Steel Mills recommended. Members who attended the meeting included MNAs Asad Umar (chairman), Qaiser Ahmad Sheikh, Dr Shezra Mansab Ali Khan Kharal, Sardar Kamal Khan Chang, Sahabzada Muhammad Nazeer Sultan, Ch Riaz-ul-Haq, Abdul Hakeem Baloch, Sajida Begum, Mehboob Alam, Maulana Muhammad Gohar Shah, Iftikhar-ud-din, and Minister for Privatization Commission Daniyal Aziz.