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ISLAMABAD: Privat-isation Commission (PC) is eagerly waiting for endorsement of valuation of Pakistan Steel Mills (PSM) assets by entity’s Board of Directors (BoD) to take the transaction to the next level, well-informed sources told Business Recorder.

M/s Joseph Lobo (Pvt) appointed as valuator of PSM’s assets, i.e., plant calculated a value of over Rs 500 billion which, according to the PC, is far above actual value of plant and machinery and not acceptable to the investors.

The value of lease of PSM land per acre is standard. The actual issue is determination of value of plant and machinery which is yet to be settled.

The Secretary PC recently sent an official delegation to Karachi to discuss the evaluation of PSM’s assets with the evaluator as the worth determined by the evaluator is higher compared to PC’s own expectations.

On Friday, a progress review meeting of PSM transaction was co-chaired by Minister for Privatisation Mohamadmian Somroo and the newly-appointed Minister for Industries and Production, Khusro Bakhtyar. The SAPM on Institutional Reforms, Dr Ishrat Hussain, Secretary Industries and Production, Afzal Latif and Secretary Privatisation, Hasan Nasir Jamy also attended the meeting.

The 14th meeting of transaction committee of PSM was held on April 13, 2021 under the chairmanship of Zafar Sobhani and discussed draft Letter of Interest (LoI) for investors, RSOQ and information memorandum/ information teaser, along with due diligence reports.

The transaction committee also discussed the following issues/documents: (i) draft deed of lease of core land along with commercial terms and conditions; (ii) Right of Way (RoW) and jetty, draft agreement of which is ready to be signed between PQA and PSMC; and (iii) utility connection for Co./subsidiary, i.e., electricity, gas and water.

When contacted, an official told this newspaper that the valuation of assets is still to be endorsed by the PSM Board so that a fair picture is presented to the investors.

PSM's mainframe is out of order and major software databases are offline/not accessible for the last one month. These databases relate to stores inventories, marketing/sale data, HR data, financial ledgers, transactions data, gratuity fund and provident fund etc. Most of the work is now being done manually or on individual computers without central servers. This approach to work is prone to errors.

Recently, the government constituted a subsidiary to proceed with the transaction with the following directors on the Board of Directors in accordance with section 165 of Companies Act, 2017: (i) Amir Mumtaz-Independent Director, Chairman PSM Board; (ii) Additional Secretary (MoI&P) - ex-officio; (iii) Joint Secretary (Large Enterprises Development) MoI&P - ex-officio; (iv) Secretary Finance or his nominee not below the rank of Joint Secretary or BPS-20 (ex-officio); (v) Secretary Privatisation or his nominee not below the rank of Joint Secretary or BPS-20 (ex-officio); (vi) Secretary, Board of Investment (BoI) or his nominee not below the rank of Joint Secretary or BPS-20 (ex-officio; and (vii) Chief Executive Officer (CEO), PSM (executive director). A number of incidents of theft of material from the Mills have been reported to the police. A couple of days ago, a gang involved in firing on security personnel and theft was busted.

Meanwhile, unauthorised letters by the management grant undue benefits of gratuity to the favoured groups/employees. In some letters, the date of regularization in service and the calculation date for retirement benefits are not synchronized. There are no SHC orders in this regard. The “undue benefits” of extra gratuity benefits extended to several groups are causing losses of millions of rupees to national exchequer.

Copyright Business Recorder, 2021


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