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ISLAMABAD: Privatisation Commission (PC) and Pakistan Steel Mills (PSM) Board of Directors (BoD) are reportedly not on the same page insofar as the valuation of the Mills' assets is concern which may further delay the privatisation process, well-informed sources told Business Recorder.

The Financial Advisor (FA) hired for PSM privatisation has officially communicated by email and informed during meetings of MOI& P and PC that the present valuation of PSM done by valuer M/s Joseph Lobo does not provide for any marketability of PSM for privatisation.

According to sources, he also conveyed the same opinion to the PC and the PSM Transaction Committee (TC) namely that the valuation made for bidding the subsidiary to be registered with the Securities and Exchange Commission of Pakistan (SECP) under a scheme of arrangement is not a value at which the subsidiary can be privatised.

FA has suggested that instead of privatisation at the non-marketable value assessed by valuer, liquidation of assets must be invoked, the sources added.

PC, according to sources, wants PSM assets valued at Rs 155 billion (so assessed by the valuer) to be reduced to Rs 60 billion, which has irritated the Chairman and PSM Board members who say that they are not ready to face National Accountability Bureau (NAB).

In an effort to pursue the reduction in valuation, two PC's TC members Iftikhar Naqvi and Asad Rasool went to Karachi and met with the PSM valuer and allegedly tried to influence him into reducing the value by at least 50%, as reported by those conversant with the PSM affairs. The Committee also sought further help from MOI&P from where an officer also went to Karachi to assist in the matter of reducing the valuation.

A senior official of PC earlier confirmed to Business Recorder that the delegation had gone to Karachi to analyze the fundamentals used in the valuation of PSM subsidiary assets.

A PSM insider on condition of anonymity told this newspaper that there was a lot of pressure on this issue but the Mills could not change its stance on a valuation that was well received and which in their opinion was on the lower side.

Chairman Stakeholders Group, Mumrez Khan reportedly argued that influencing the valuer and PSM management for review of the value is highly questionable. He said the interest of FA is understandable but the interest of PC's TC members may invite legitimate concerns of anti- graft agencies as to why a massive reduction in the estimate of the valuer and management of PSM is being sought.

He further stated that the incumbent government has wasted 32 months adding on Rs 150 billion on account of losses and debt liabilities.

The Chairman of TC Zafar Sobhani reportedly was also aware of attempts by DG PC and Consultant of PC in aid of MOI& Ps drive for reduction in valuation of PSM assets. This issue reportedly was also discussed in the previous TC meetings.

The tussle between the PSM and PC on privatisation is evident from the fact that Chairman PSM resigned as a member from PSM TC on April 9, 2021 and informed the Federal Minister for Industries and Production, with a copy to Secretary MOI&P, that he is withdrawing from the TC setup by the Privatisation Commission because PSMs suggestions and inputs have been ignored almost in their entirety.

“This indicates that something is cooking in PC which is not acceptable to the Board”, said the insider.

PSM has retrenched thousands of employees to prepare the mills for rehabilitation but is still paying salaries to thousand others with zero output, including recently renewing contracts of those in top positions.

Copyright Business Recorder, 2021

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