ISLAMABAD: The Board of Directors (BoD) of Privatisation Commission is to approve transaction structure of Pakistan Steel Mills (PSM) on Wednesday (today).
PC has proposed two models for carving out key operating assets of PSM, which is dysfunctional since June 2015.
Mode-1 is divestment of majority shares of new subsidiary through SECP/ court sanction. In this model, key operating assets would be transferred to new subsidiary through a scheme of arrangement which include divestment of majority shares of new subsidiary to the investor. Share price of the new subsidiary will be fixed.
Mode-2 is based on concession agreement with Special Purpose Vehicle (SVP), according to which key operating assets would be transferred to SVP through concession to be retuned to GoP at end of 30-year concession period (no sale). Revenue will be shared over the tenor of concession period.
The sources said, core land encompassing 1,268 acres will be leased in both modes (initial term of 30 years with renewal option). PSM's revival and expansion plan will be based on three phases (total 36 months). First phase will be based on 0-10 months (revival to 1.0 MTPA, second, 9-27 months (expansion upto 2 MTPA and phase three expansion up to 4.0 MTPA (18 to 36 months).
The estimated capital expenditures will be as follows; - phase 1- 1 MTPA (revival) is $ 580.35 million;(ii) phaseII-2 MTPA( expansion) cost 306.09 million and phase III-3 MTPA( expansion) cost $ 510.75 million. The grand total is $ 1.397 billion.
The products will be as follows;(i) hot rolled coil (phase-10.98 MTPA) - post capex 1.4 million tons per annum;(ii) cold rolled coil phase-II- 0.5 MTPA and ; re-bar ( phase iii)- 0.98 MTPA. According to the proposed plan of SinoSteel, for phase I, (1 MTPA revival) 3,431 employees will be required whereas 1,751 employees will be added in phase II (2 MTPA) expansion and 2,018 in phase-III-3 (MTPA) expansion. The grand total will be 7,200 employees. The PC BoD will also approve transaction structure of Heavy Electrical Complex (HEC). It will review privatisation of HBFC in the light of Cabinet decision. The Board will further discuss divestment of upto 10 per cent share of PPL and 7 per cent shares of OGDCL.
Copyright Business Recorder, 2020
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