ISLAMABAD: The government's Pakistan Steel Mills (PSM) "disposed off" plan appears to be in the doldrums after recent seemingly strong observations of Supreme Court of Pakistan (SC).
Informed sources told Business Recorder, the Ministry of Industries and Production (MoI&P) and Privatisation Commission (PC) which are leading the "disposal" in consultation with the Financial Advisors are now rethinking this strategy.
The PSM's provisional losses have touched Rs 300 billion plus payable debt liabilities were Rs 290 billion as of June 30, 2020 which are increasing with each passing day due to irresolution of the government.
The PSM stopped its commercial operations in June, 2015 without formulating any Human Resource (HR) plan for its 14,753 employees. The number of PSM employees declined to 9,350 by 2019. Presently, the per month net salary bill of PSM employees is approximately Rs350 million, adjusted as a loan in the financial accounts of PSM. Since 2013, aggregate loan of Rs34 billion has been extended to PSM by the Government of Pakistan on account of net salary payment.
"The people of Pakistan have already paid out enough. PSM owes over Rs 230 billion in loans to different companies, banks and the government. Every passing month adds a loan of just under Rs 2 billion to the already accumulated loans. We are working hard to reduce the losses and renegotiate loans and address liabilities," said Chairman PSM Board Aamir Mumtaz, who according to senior officials is also fed up with current mess and is considering leaving the country.
The Ministry of Industries and Production had informed the ECC and Cabinet that it needs Rs 20 billion to retrench all employees but PSM counsel informed the SC last week that Rs 40 billion funds would be required for dismissal of employees and implementation of PSM's public private partnership decision. The government has paid Rs 45 billion to the PSM's employees so far without any output.
However, on June 9, 2020, when the ECC decision of June 3, 2020 tabled before the cabinet for ratification, some of the members vehemently opposed the manner in which employees were being terminated and were skeptical about the timing of the decision.
Though, cabinet minutes did not mention the names of those cabinet members who raised questions on the manner of termination, insiders claim it was Minister for Planning, Development and Special Initiatives, Asad Umar. The cabinet members debated at length various options available to avoid termination of employees which included entering into G2G arrangement with China, which it was informed, was still possibly in the field, and Voluntary Separation Schemes (VSS). However, Chairman, PSM Board stated that there was little possibility of the Chinese retaining the entire labour force and on VSS he was skeptical that the majority would accept the offer.
Last week, Chief Justice of Pakistan while hearing the case of PSM remarked that the government's proposed plan was a disaster as all the employees could not be fired.
However, Additional Attorney General informed the SC that the cabinet did not decide to fire all the employees of PSM.
Aamir Mumtaz said on July 18, 2020 that the government was evaluating the implications of the SC observations. He further stated that Finance Division has not yet released the required amount to be paid to the employees to be terminated.
Copyright Business Recorder, 2020
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