PSM decides to seek Rs 11 billion additional funds

February 13, 2014

MUSHTAQ GHUMMAN

Steel
Steel

Pakistan Steel Mills (PSM) management has decided to seek Rs 11 billion additional funds in three instalments from the federal government to run its affairs till June 2014, well informed sources told Business Recorder. National Assembly Standing Committee on Industries and Production (MoI&P) headed by PTI stalwart, Asad Umar is meeting on Thursday (today). Besides, other issues, the PSM”s future plan will also come under discussion.

According to the management, funds are not available for procurement of raw materials and payment of salaries w.e.f 1st November 2013. There is no coal available. PSM operated at 7% average capacity from July- December 2013. Presently capacity utilisation is almost near to closure due to non-availably of coal. “It is very difficult for the PSM management to even save the Blast Furnace (BF) and Coke Oven Battery Plant (COBP) from any major damage in a situation of non availability of coal and ever reduced capacity near to closure,” the sources added.

Given the fact that PSM”s financial and operational position is consistently deteriorating in the absence of critically needed funds and management capability, the recently constituted Board of Directors of PSM has met four times in October and November 2013 to deliberate on a number of options as follows, inter alia which have been presented to ECC of the cabinet on 16 January 2014. The employees of PSM should be paid 45 days salaries w.e.f. 15th October 2013. (The amounts of cash salary for 45 days amounting to Rs 720 million received on 6th February 2014 was disbursed to the employees on the same day).

Pending privatisation of the PSM, its restructuring exercise should continue in transaction period for which the PSM should prepare the plan and share the same with the privatization commission and MOI&P. PSM should be allowed to mobilise loans without GoP guarantees to continue with its operations to the extent possible. The amounts of cash salary for 45 days amounting to Rs 720 million received on 6th February 2014 has been disbursed to the employees.

From August 2013 to January 2014 GOP provided a support of Rs 2.9 billion, which has been utilised for payment of mainly salaries and some critical liabilities. On the direction of MOIP, PSM has managed to sell its old stocks to keep the mill in a living state by making sales and generating funds of Rs 5.8 billion. Revival Plan of Pakistan Steel Mill is under preparation in consultation with MOI&P and Privatisation Commission, which will be submitted after approval of Board of Directors.

PSM has already initiated the process and the progress achieved. Other issues which will come under discussion are as follows: (i) details of the basis/criteria of recent past subsidy on sugar and sugar industry”s proposal for supply of power to national grid; (ii) issues related to distribution of fertilisers and its availability to the farmers. Profits of each fertilizer company for the year 2009-12 and price of urea (per bag) on January 1, 2009 and on December 31, 2012 along with an analysis of the reasons for difference/increase in price; (iii) steps being undertaken to improve performance of PSEs under the control of MoI&P including measures taken to change Board of Directors and CEOs; and (iv) the basis of gas allocation decision amongst different industries in particular textile versus other value addition industries. Business Recorder

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