PTI govt approves sale of Pakistan Steel Mills’ core operating assets
Government has been weighing options to rejuvenate the PSM under the public-private partnership mode in phases that was estimated to cost around $800 million
December 25, 2020
ISLAMABAD: The federal government has approved sale of Pakistan Steel Mills' (PSM) core operating assets to private sector, The News reported on Friday.
The decision was taken on the recommendation of the privatisation committee during a meeting of Cabinet Committee of Privatisation (CCoP) chaired by Minister for Finance Dr Abdul Hafeez Shaikh on Thursday.
The meeting was attended by Minister for Industries and Production Hammad Azhar, Minister for Maritime Affairs Ali Haider Zaidi, Special Assistant to Prime Minister on Petroleum Nadeem Babar, Minister for Privatisation Mohammadmian Soomro, Adviser to the PM on Commerce Razak Dawood, Minister for Energy Omar Ayub, Special Assistant to Prime Minister on Power Tabish Gauhar and other senior officials.
In a statement, the finance ministry said the approved structure for the PSM would allow for the transfer of "identified core operating assets into a wholly-owned subsidiary of PSMC through a scheme of arrangement as provided in the Companies Act 2017 followed by a sale of majority shares of the newly formed subsidiary, without transferring full ownership to strategic private sector partner".
Also read: PTI-led government to privatise 33 state-owned entities
The government has been weighing the option to rejuvenate the PSM under the public-private partnership mode in phases that was estimated to cost around $800 million. The plant would be revived to achieve its built-in capacity in the first phase within one and a half-year, while the production capacity would be jacked up to three million tons in the second phase.
The PSM shut down its furnaces in 2015 and it consumed at least Rs200 billion of state funds on various heads from 2008 when it used to be a profitable organisation. The government had to pump an estimated Rs400 million every year to pay salaries of the PSM’s employees.
Read more: PM Imran for privatisation of identified institutions within time frame
The Imran Khan-led government decided to privatise the entity to ease pressure on the fiscal account. A number of state-owned enterprises couldn’t give profits to the national treasury and every government has tried to shed such assets to earn one-time revenue and save recurring expenditures.
However, privatisation has been a hard nut to crack for every government due to political backlash.
The privatisation decisions that are currently seen taken in haste are to cajole International Monetary Fund to revive the stalled $6 billion loan program for Pakistan.
