ISLAMABAD: Pakistan Steel Mills (PSM) restructuring plan and recent retrenchment of over 4500 workers will be the top agenda item of the Federal Cabinet on Tuesday (today) as protest of affected workers has intensified. Presided over by Prime Minister, Imran Khan, the Cabinet will also discuss political and economic issues facing the country.
The sources said a clear division is expected in the cabinet on the retrenchment plan of PSM as Minister for Planning, Development and Special Initiatives, Asad Umar, has already given his dissenting note on the retrenchment plan in previous Cabinet meetings. Umer had publicly committed to the PSM workers at the time of elections that he would leave the government in case of any large scale retrenchments.
One of coalition partners, MQM (Pakistan), is also against the retrenchment plan as a very large number of workers of PSM belong to Karachi. The Minister for Information Technology and Telecom from MQM, Syed Amin ul-Haq, is likely raise the issue in the Cabinet. Minister for Provincial Coordination, Dr. Fahmida Mirza from GDA, another coalition partners, who also hails from Sindh, is expected to oppose the retrenchment of PSM workers.
The Cabinet Division will present CCoP's minutes of November 16, 2020, including the PSM revival plan. According to the CCoP minutes, seen by this newspaper, a detailed presentation encompassing features of the transaction structure options including ancillary details was made to the PC Board in its 4th meeting held on Sep 02, 2020, whereby, after a detailed & threadbare discussion PC Board approved the following transaction structure: to proceed with the privatisation of PSMC and recommended it for consideration of the CCoP "transferring of identified core operating assets into wholly owned subsidiary of PSMC through scheme of arrangement (as provided in the Companies Act 2017) followed by sale of majority shares of the newly formed subsidiary (without transferring of full ownership) to strategic private sector partner or transferring of identified core operating assets to private sector strategic partner through concession / lease agreement for 30 years."
According to sources, both MoI&P and PSMC remained part of nine Transaction Committee meetings as well as PC Board meetings besides meetings co-chaired by Minister for Industries & Production and Minister for Privatization on this matter held on July 27 & Aug 28, 2020 and were fully on-board in formulation and finalization of transaction structure, MoIP also communicated its observations on the subject matter.
Furthermore, one of the PC Board members raised concerns with respect to forgoing potential tax reversals on account of carry-forward business losses incurred by PSMC on year on year basis and proposed to carve out non-core assets out of PSMC while leaving core-assets within PSMC and divesting its majority shares.
"Considering the sensitivity of the matter and before proceeding further, it was necessary to respond to the belated observations raised by the PSMC in the letter, most of which were either preemptive in nature or were not relevant to the transaction structure approved/recommended by PC Board," the sources added.
Accordingly, a detailed response to each of the observation of the MoIP, PSMC and PC Board member was made for their perusal and acknowledgement besides submitting to the PC Board, wherein, Financial Adviser (FA) presented detailed responses to each of the observations. After thorough deliberations and discussion, PC Board acknowledged and accepted the explanation and justification rendered by the FA on the observations of MoIP, PSMC and PC Board member and endorsed its earlier decision for the transaction structure approved in the meeting held on September 23, 2020.
Ministry of Privatization requested the CCoP to consider the following recommendations of the PC Board, initially approved in its 4th meeting held on September 2, 2020 later re-affirmed on September 3, 2020 in its 5th meeting, in order to proceed with the privatization of PSMC: " transferring of identified core operating assets into wholly owned subsidiary of PSMC through scheme of arrangement (as provided in the Companies Act 2017) followed by sale of majority shares of the newly formed subsidiary (without transferring of full ownership) to strategic private sector partner."
On November 20, 2020 the CCoP constituted a committee under the chairmanship of Minister for Industries and Production comprising Minister for Privatisation, Adviser to the Prime Minister on Institutional Reforms & Austerity, Chairman, BoI, Secretary, Finance Division, Secretary, Ministry of Privatisation and PSMC Financial Advisers (appointed by Privatization Commission), to examine the proposal in a holistic manner, and submit a report thereon to CCoP for consideration. Ministry for Privatisation would provide secretariat support to the committee.
Copyright Business Recorder, 2020