ISLAMABAD: Finance Minister, Shaukat Tarin has sought two more valuations of assets of Pakistan Steel Mills (PSM) as he is not satisfied with the valuation already done by the Privatisation Commission, well informed sources told Business Recorder.

On June 7, 2021, Finance Minister chaired a meeting on the valuation of the core assets of PSM reflected on the balance sheet of the new subsidiary and issuance of NOC by (a) National Bank of Pakistan; and (b) Sui Southern Gas Company Limited (SSGCL).

Finance Minister highlighted the importance of early settlement of outstanding issues in the privatisation process of PSM. Secretary Privatisation gave a briefing about the progress made in this regard and mentioned that the resolution of valuation of core assets of PSM and No Objection Certificate (NOC) are critical to furtherance of the privatisation of PSM.

After detailed deliberations, the following decisions were made: (i) Privatisation Commission shall undertake two more valuations of the core assets with the approval of CCoP, if required. One valuations may be assigned to Nespak while the other valuation may be undertaken by one of the top 5 valuers on the approved list of Pakistan Banks' Association; (ii) to expeditiously process the issuance of NOC by NBP, AFS (CF) will hold a meeting with the representatives of NBP, PSM, M/o Industries and Production and Privatisation Commission; and (iii) regarding issuance of NOC by SSGC, it was decided that the payment schedule of Rs.22 billion principal outstanding, subject to reconciliation, may be kept at 7 years supported by a Letter of Comfort (LoC) by Finance Division. A meeting will be chaired by Finance Minister after the budget to find a way forward for the settlement of LPS.

PC Board, which is scheduled to meet on Friday (today), will deliberate and decide on the following: (i) consideration of PSMC Board decision of May 06, 2021 regarding key operating assets and corresponding Fair Market Valuation (proposed transfer of core assets to new subsidiary and audited financial statement of PSMC for period ending December 31, 2020, including the list of key operating assets; (ii) consideration of PSMC Board decision of May 06, 2021 regarding core land comprising 1,229 acres as determined by the PSMC Board; (iii) consideration of PSMC Board decision of May 06, 2021, “the right of use of land (1229 acres) to be awarded without entering into a lease agreement as per the standard terms to subsidiary until the strategic partner comes in, thereafter the terms and conditions of the land lease will be decided at arm's length principle with the strategic partner”; and (iv) endorsement of the PSMC and PQA decisions regarding a jetty and a ROW agreement specifically with reference to clause 6 of the agreement, “The PSMC may assign/sub-let its rights under the agreement to its subsidiary for the purpose of handling of cargo at IOCB or PSMC steel production only subject to the approval of PQA. In such case, terms and conditions will differ "to execute jetty and ROW agreement with the Steel Corp. including terms and conditions at arm's length upon buy side due diligence and prior to conducting the bidding.”

The Board was to approve transfer of existing utility connections and power generation licence to Steel Corp (Pvt) Ltd, unencumbered along with effective date of SOA as January 01, 2021. In addition, the Board was to approve Steel Corp. (Pvt) Ltd. either to be retained by PSMC in the light of approval of PSMC Board or shares to be issued to GoP in lieu of its outstanding loan to the PSMC. Approval regarding quantum or range of equity stakes of Steel Corp. (Pvt) Ltd tobe divested i.e. 1) 51-74% or 2) 51%-100%. approval of paid up capital of Steel Corp. (Pvt) Ltd. to be equal to Net Assets (Rs 9.451 billion as at December 31, 2020). Privatisation Commission was to invite Expression of Interest (EoI) from interested parties after filing of Scheme of Arrangement (SOA) by PSMC with SECP, duly incorporating decisions of the PC Board/CCoP/Cabinet on the items.

The Convener of Stakeholders Group, Mumrez Khan, pointed out that PSM is highly politicized public sector organization, adding that the government, i.e., PC/MoI&P, is wasting time and money on sell off exercise.

He requested the government to review the process and stop further financial bleeding of PSM initiated by the government’s ill-planned and unworkable roadmap. He further contended that the present path of dealing with PSM will lead to further financial disaster and suggested a tripartite meeting between the PC, MoI&P and Stakeholders Group to find out a solution to the long-pending issues related to privatisation of PSM.

Copyright Business Recorder, 2021


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