The employees of Pakistan Steel Mills (PSM) are not willing to accept government’s proposal to lease out the country’s largest industrial unit for 30 years and urged that those who brought this national asset to its knees be held accountable.
The employees has sent a letter to the ministries of finance, privatization and industries in which they asked a suggestion for the imposition of regulatory and anti-dumping duties or a ban on steel imports for the future private operator, wondering why such protections were never granted to the PSM while it was in public hands, despite repeated requests.
The union alleged that the PSM’s financial position had gone from bad to worse over the past three years; loss and liabilities stood at Rs200 billion on June 30, 2013, but increased to Rs415bn on Dec 31, 2016, because of “a failure of government policies and priorities”.
According to workers it can revive the dormant unit.
PSM is going to be on lease for 30 years under a revenue-sharing arrangement and offer a voluntary separation scheme (VSS) to about 5,000 employees and The Privatisation Commission’s board of directors recently approved this proposal by financial advisers and the commission.
It was agreed that the government would take care of about Rs166bn liabilities and offer VSS to at least 4,835 employees – about half of the mill’s existing strength – and outsource services of some of the remaining workforce to the new operator. The proposal also envisaged protection to the incoming operator from steel imports through regulatory and anti-dumping duties.
The proposal has not been proved by Finance Minister Ishaq Dar the head of Cabinet Committee on Privatization. The privatization board agreed on the bidding to be held on the basis of revenue-sharing with the government over the tenor of the lease.
The deal was approved with a commitment that the government would convert its Rs33bn in financing/loans and guarantees into equity and issue interest-bearing coupons to the Sui Southern Gas Company for Rs35bn dues and Rs50bn to banks for interest/loan repayment and bear about Rs17bn of the employees’ severance cost.Under the plan, a major portion of the PSM land would remain with the government, while its plant and machinery would be handed over the new company for 30 years.
According to the workers somebody should be held accountable for causing Rs215bn additional losses to the exchequer in three years, on top of the $1.5bn additional burden on the country’s foreign exchange due to the steel import bill following the halt of PSM production as “PSM was forcibly shutdown in June 2015 by the government”, CBA Union alleged.
The union said the losses were “due to non-availability of raw material, gas supply disconnection and other logistic issues being the responsibility of the government.”
The letter said that serving and retired employees were currently suffering due to non-payment of salaries, medical bills and retirement benefits while the ministries concerned remained silent spectators.
A special audit was carried out by the Auditor General from July to December 2015 on the request of the Privatization Commission. The audit reportedly unearthed financial irregularities, but no action was taken against the persons found to be at fault.