ISLAMABAD: State-owned enterprises' (SOEs') cumulative financial losses have reached Rs2,000 billion mark, Federal Minister for Industries and Production Hammad Azhar said.

While briefing the Senate Standing Committee on Industries and Production here on Wednesday, he said that owing to serious mismanagement-related problems various state-owned enterprises had just become "white elephants" and a burden on national kitty.

The committee's meeting was held under the chairmanship of Senator Ahmed Khan to discuss matters related to the Pakistan Steel Mills (PSM).

He said that owing to this, the government has decided to privatize PSM for which a bidding process is likely to complete by the end of December 2020.

He maintained that at least 12 Chinese and Russians firms have expressed interest in the privatization of PSM.

Azhar accused the previous governments of turning PSM into a employment bureau and said that, about 4,000 PSM employees were made permanent in 2010 by the Pakistan People's Party government; as a result, the industrial unit started incurring financial losses.

Noting that the facility's deficit is more than Rs230 billion at present, he said the PSM would be run as a public-private venture (PPV).

"We need to take tough decisions, if these public-sector enterprises are to be restored," he said, adding that running such state-owned entities required going beyond politicking.

The federal minister claimed that the Supreme Court (SC) had already sought a plan regarding the PSM's privatization and the government would go into the privatization process in accordance with the SC's orders. "We have received expressions of interest from 12 global companies for the privatisation of the PSM, and six of them have visited the facility, of which three are serious about purchasing it," the minister added.

"These companies are from China and Russia," Azhar mentioned, adding that the mills could only be bought by an international company since local investors did not have the capability to do so.

"An investment of more than $1 billion is required to run the PSM," he told the Senate committee.

"It's not like we will abandon the PSM employees," he stressed, noting that the cases of approximately 500-600 employees of the PSM were currently being heard in various courts.

He said the government would ensure payments to every employee of the PSM.

The minister stated that Pakistan's total steel consumption was seven million tonnes and the country currently produced seven million tonnes.

Pakistan currently imports all the raw materials for making steel products, he added.

A former employee of the PSM, Amraiz Khan, invited by the chairman committee, while briefing the panel, said since 2008 the employees presented an alternative model to the government of reviving the PSM but authorities did not listen to them as a 'mafia' wanted to privatize the entity to benefit certain people.

He said the mills had become dysfunctional owing to unprofessional management and absence of Board of Directors, adding that if the government today appoints professional chief executive of the PSM and constitutes board of directors consisting of professional people, within a year the mills will be making profit.

Member Committee Senator Sirajul Haq, while taking part in the discussion, suggested that a subcommittee of the committee must be constituted to look into the PSM-related matters in detail, so that it could present an alternative plan for the revival of the ailing entity as the main aim behind privatization was restoring the mills.

He said that in 1973 the PSM was established at Rs26 billion and now building such a mills would cost Rs2,600 billion, so the government must consider this point seriously and try to restore it.

Responding to Siraj, Azhar said that Pakistan's annual demand for steel was around seven million tonnes while local production also stood at the same level, adding that only raw material to run the steel industry in Pakistan was being imported.

The committee agreed with the suggestion of Sirajul Haq, and decided to constitute a subcommittee tasked to present a detailed document on the alternative plans of the revival for the PSM.

Copyright Business Recorder, 2020