The International Monetary Fund (IMF) has reportedly expressed annoyance at Pakistan's economic managers for extending bailout packages and expenditure based financial support to those entities which are under active privatisation plan. This was disclosed by the Secretary Privatisation Division, Sardar Ahmad Nawaz Sukhera at a meeting of Pakistan Steel Mills (PSM) Board of Directors (BoD).
The meeting was presided over by Engineer Jabbar Memon- one of the board members as PSM has no permanent Chairman of the Board. Well-informed sources in Ministry of Industries and Production revealed that Secretary Privatisation Commission informed the Board that the IMF is deeply concerned at the delay in the privatisation process as well as the bailout and expenditure-based packages to PSM and PIA.
The government has extended a bailout package of Rs 10 billion to PIA and Rs 18.6 billion to PSM in addition to payment of salaries to PSM employees. The sources quoted Secretary Privatisation Commission as saying that the bidding process of PSM will be finalised by March 2016 after which this transaction will be completed by June 2016. The IMF, sources further stated, has sought date-wise privatisation plan of Faisalabad Electric Supply Company (Fesco) and Islamabad Electric Supply Company (Iesco).
According to sources, PSM board was first given a detailed briefing on the privatisation process by Secretary Privatisation. The Board also discussed three business plans which were later clubbed into two, the sources said, adding that a new business plan of Rs 8 billion has been tailored by two officials of steel mills who are retiring in a few months.
Chief Executive Officer (CEO), PSM, Major-General Zaheer Ahmad Khan (Retd), who got a Rs 18.6 billion bailout package from the Economic Coordination Committee (ECC) of the Cabinet on the assurance that he would achieve a 77 percent CAPU, complained that the federal government released the bailout package piecemeal. He argued that when the Mill was about to achieve 65 per cent CAPU, SSGC suspended its gas supply, which he termed 'a conspiracy against the entity'.
He suggested that the government should extend another bailout package of Rs 8 billion to start the Mills. The BoD did not agree with him and suggested that PSM should prepare a detailed paper for Prime Minister Nawaz Sharif and Finance Minister, Senator Ishaq Dar and mention reasons for failure to achieve the targets and justification for the new package.
Minister for Industries and Production Ghulam Murtaza Khan Jatoi maintained that the Mill cannot operate at more than 45-50 per cent CAPU which implies that the CEO's earlier commitment was not achievable. PSM's Board, sources said, has no say in the policy affairs of PSM. However, Board members who stay in five-star hotels from the bailout money during Board meetings in Islamabad will have to be held responsible for not achieving the desired results of Rs 18.6 billion bailout package. Board members of other public sector entities are facing NAB inquires.
During a four-hour discussion, the representative of Ministry of Industries and Production told the board that the Ministry does not support payment of salaries to the employees from the national exchequer. He advised the PSM's top brass to sell its own inventory of Rs 9 billion to pay the salaries. CEO PSM, sources said, however, argued that most of the inventory is raw material which cannot be sold until converted into finished products.
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