ISLAMABAD: The Privatisation Commission (PC) has expressed strong annoyance at Chairman Pakistan Steel Mills (PSM) Board Aamir Mumtaz for questioning “fairness” and “transparency” in the PSM transaction.
The PSM Board Chairman, in a letter written to Chairman PC Board and Board Members, a copy of which was also sent to Prime Minister through his PS, hurled accusations at the PC for not treating the mills’ revival process fairly and transparently.
Reacting to the letter, sources in PC said that the Chairman does not attend the PC Board or Transaction Committee meetings which are meant to proceed as per the rules and regulations.
The sources said Chairman PSM Board, in his letter, has “distorted” many facts, adding that he is responsible for the delay in finalisation of the transaction.
PSM is the only transaction where progress is reviewed every week and the Minister presides over most of the meetings. Minister for Industries and Production also attends these meetings and previously Hammad Azhar used to attend meetings pertaining to PSM and now he has been replaced with Makhdoom Khusro Bukhtiar.
“Two ministers – Minister for Privatisation and Minister for MoI&P – meet every week to review progress on agreed actions aimed at taking the transaction ahead expeditiously,” the sources continued. Privatisation Commission has raised serious objections to the words “deal maker” used by the Chairman PSM in his letter.
“Does Chairman PSM Board reckon we should hand over the national asset to any party without following procedure?” the sources said, adding that PC has not brought in deal makers’ which is why he may be annoyed.
“All PC transactions are processed under the rules and regulations of PC Ordinance,” the sources said, adding that PC cannot avoid process even if it wants to skip those rules.
Four or five transactions are almost ready but no one raised a finger on the process as PC followed all the rules and regulations.
“Chairman PSM Board’s own letter is contradictory. On one hand, he says that EoI is not issued and on the other he says corporate actions are not completed. He also says that PC team is not competent and suggested that deal makers be brought in,” the sources maintained.
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 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 a 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 any 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 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 the aspect of 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 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 views on structure and guarantees, he said 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.
Copyright Business Recorder, 2021