MUSHTAQ GHUMMAN
ISLAMABAD: The Cabinet Committee on Privatisation (CCoP) headed by Prime Minister’s Advisor on Finance, Dr Abdul Hafeez Shaikh has reportedly pressurized Privatisation Division to deviate from its mandate for recruitment of Transaction Advisor for Pakistan Steel Mills (PSM) on Public Private Partnership (PPP) basis, sources close to Privatisation Minister told Business Recorder.
Presently, the PSM is on autopilot and being run without any permanent CEO and effective Board of Directors and all the decisions are taken without any legal authority.
According to sources, the CCoP decided in its meeting held on October 31, 2018 to delist Pakistan Steel Mills (PSM) from privatisation program and directed Ministry of Industries and Production (MoI&P) to submit viable recommendations/ plan for operationalization of PSM to CCoP within 45 days. Subsequently, the matter regarding appointment of Transaction Advisory Consortium for revival of PSM was submitted to the Economic Coordination Committee (ECC) of the Cabinet on May 3, 2019 for consideration. The ECC agreed to the proposal of MoI&P for placing PSM on the privatisation list and directed the Ministry to make a formal proposal to the CCoP. The Cabinet while ratifying the ECC decision also directed the Advisor to the Prime Minister on Commerce and Industries and Production and the Advisor to the Prime Minister on Finance, Economic Affairs and Revenue to oversee the revival plan of PSM.
During the ensuing discussion, the CCoP expressed its concern over non-implementation of Cabinet/ ECC decision regarding PSM despite lapse of considerable time. The meeting observed that substantial time has been wasted unnecessarily on seeking approval of the Prime Minister despite having approval of the federal cabinet. The MoI&P clarified that the approval of the Prime Minister was in fact sought in his capacity as Minister-in-Charge for placing the summary before the CCoP in the light of ECC’s decision as required under Rules of Business, 1973.
Ministry of privatisation stated that Privatisation Ordinance, 1973 does not deal with Public Private Partnership (PPP), therefore, their Ministry is not in a position to take further action on implementation of ECC’s decision regarding revival plan on PPP basis. The ECC while re-iterating its earlier decision of May 3, 2019 directed Ministry of Industries and Production to submit its proposal on the issue to the CCoP in its next meeting for consideration.
The sources said six companies from Russia, China and South Korea have shown an interest in running PSM, therefore, their offers must be considered as an opportunity.
The CCoP noted the position presented by the Privatisation Division regarding privatisation of PSM and directed that mills be placed in the privatisation list. The CCoP directed the Privatisation Commission to immediately advertise for the recruitment of a transaction advisor for this transaction i.e. to bring in a party for the revival of the Pakistan Steel Mills without transfer of full ownership.
The CCoP also asked for a committee comprising Minister for Privatization and Advisor to PM on Commerce and Industries to review the progress and report to the ECC.
On June 26, 2019, the ECC was informed that PSM has not been able to pay the dues (gratuity, provident fund and leave encashment), to its retired employees outstanding since May 2013 that resulted in protracted litigation. Around 3000 employees out of total 4,682 who retired on or before December 31, 2018 of PSM filed petitions in Sindh High Court (SHC) for the payment of their outstanding dues. The court in its order of August 16, 2018 directed all concerned i.e. Ministry of Industries and Production and PC to resolve the issue of the payment of gratuity, provident fund and leave encashment of the PSM employees within a period of 90 days from the date of order i.e. November 15, 2018. The total outstanding dues on account of gratuity, provident fund and leave encashment of the employees retired from PSM on or before December 31, 2018 including the petitioners were Rs 17.135 billion out of which an amount of Rs 1.266 billion has already been paid to the heirs of deceased employees and Rs 15.869 billion remain outstanding.
Ministry of Industries and Production further stated that Finance Division in its comments conveyed that outstanding dues of Rs 15.869 billion is not a liability of federal government and there was no budgetary allocation for this purpose in outgoing fiscal year.
Ministry of Industries and Production requested the ECC to consider and issue directions for releasing an amount of Rs 15.869 billion to avoid contempt of court proceedings. However, the meeting observed that the number of PSM employees is quite large and federal government has very limited fiscal space after NFC award. Legal opinion/ advice of Law and Justice Division and Attorney General has been sought on the issue of payment of dues to the retired employees of PSM from the federal consolidated fund.
