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ISLAMABAD: Chairman, Pakistan Steel Mills (PSM) Board, Aamir Mumtaz, has reportedly accused Privatisation Commission ((PC) of not treating the mills' revival process fairly and transparently, sources close to Secretary Industries and Production told Business Recorder.

Mumtaz, who did not attend the PC Board meeting on July 19, 2021, has conveyed his concerns and suggestions to Prime Minister, through Secretary to PM, Minister for Privatisation Division, Minister for Industries and Production and concerned Secretaries and CEO PSM.

According to Chairman PSM Board, the privatisation project of PSM was assigned to the Privatisation Commission during the last quarter of 2019. Since then, he has been closely associated with the project and has been providing his best input and support to the various teams working in Pakistan Steel, the Ministry of Industries and Production and the Privatisation Commission.

Chairman PSM Board, who resigned from the Transaction Committee of PSM, has submitted his recommendations and observations in the context of the Pakistan Steel project.

Mumtaz, who is an American citizen and was brought to the PSM by Advisor to Prime Minister, Abdul Razak Dawood, argues that despite the passage of over a year and half, even an Expression of Interest (EoI) has not been published. A never-ending list of corporate actions, preparatory tasks and pre-closing actions is causing unwarranted delay in the selection and contracting process of an investor. This may be looked at and needs urgent review to avert further delay. However, good progress has been made on creation of the subsidiary and bifurcation of the assets.

Commenting on plan/approach, he said that this should be reviewed and where possible, project tracks should be executed concurrently and appropriate workarounds should be found to make the process more efficient.

"We need streamlining and fast tracking of this project to avoid deadlines being missed repeatedly," he suggested.

On decision making, Mumtaz has observed that despite objections from working levels (boards and management) there seems to be a practice of obtaining decisions from other forums without providing them with pros and cons and working documents that also show dissenting opinions so that an informed choice can be made. The members of forums such as the Cabinet Committee on Privatisation (CCoP) are very busy people and do not have the time and wherewithal to do an in-depth evaluation and deserve to hear dissenting opinions and recommendations from other stakeholders so that the right decisions are made. These decisions are then used to overrule and push aside dissenting and potentially valid arguments from other stakeholders. He added that he believed this is not a practice that would result in the best outcome for Pakistan Steel and the Government of Pakistan.

Commenting on transparency, the disgruntled Chairman PSM Board stated that the purpose of undertaking a competitive bidding exercise run by an independent consultant was to ensure a clean, professional and a beyond reproach process. However, the approach of the consultants is to provide a wish list of concessions as revealed in the comments during meetings and review sessions. Some examples of this are the PQA-PSM agreement for use of Jetty, comments on M/s Joseph Lobo valuation and preferred valuation of assets from valuator.

How are such discussions taking place in a process that has very strict rules of information disclosure, arm's length communications and legal requirements to obtain the best terms through bidding? It would be very helpful for the Board to examine the workings of the consultants to ensure that the norms of a competitive bidding process are being followed.

"Very often it feels like a negotiated process with the consultants negotiating on behalf of an investor," he maintained.

Sharing his view on structure and guarantees, he said that the government must be very careful in ensuring that the private enterprise which is being created does not distort the steel market by being generously gifted with benefits, guarantees from the government and freedom from some commercial risks.

"This aspect needs to be reviewed and we must ensure that the goal of extracting the public treasury from future liabilities is met and we do not inflict another IPP type of arrangement on the people of Pakistan," he continued.

Mumtaz, Chairman of subsidiary to be privatised, maintained that it would be highly beneficial for the country if the Government can implement reforms and transforms the Privatisation Commission to make its operations results oriented, pragmatic and efficient, adding that this exercise should also look at the team, their skill levels, competency and capacity to deliver the goals set by the government.

He suggested that Privatization Commission team needs to add deal makers, transaction managers and technical personnel to be able to fast-track such projects and manage consultants appropriately.

"For the country to move forward, we need to have the right person for the right job," he advised PC.

When contacted, Chairman PSM Board, Aamir Mumtaz said that nothing is extraordinary in the letter.

"We routinely communicate with our colleagues in the Privatization Commission to exchange views on how to improve and expedite the revival process," he said, adding that due to conflict in schedules, he was not able to attend the meeting.

In reply to a question, he said that he has stressed the same point that the Prime Minister and the whole country wants - which is a speedy execution of the revival/privatisation process.

"I have also repeated what I have been saying for a while that we should advance on the investor selection track of publishing an Expression of Interest and start preparing for the bidding exercise and contracts. Where possible, project tracks should be executed concurrently and appropriate workarounds should be found," he continued.

Mumtaz maintained that he has also recommended that it would be highly beneficial for the country, if the needed reforms and transformation of the Privatisation Commission can be implemented to make their process more streamlined, pragmatic and efficient.

Copyright Business Recorder, 2021

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