Jango
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ISLAMABAD: Standstill on heat-mode for the last 56 days with zero production, the Pakistan Steel Mills (PSM) is seeking around Rs5 billion from the federal government along with postponement of gas bills to avoid complete shutdown.
“Mismanagement and corruption has led the country’s largest industrial complex to a virtual shutdown. It’s already on its last leg of life, breathing on ventilator,” a senior official of the Ministry of Industries and Production told Dawn. “This is unprecedented in the history of any metallurgical plant in the world to have run on heat-mode for so long,” he added.
“It is unable to pay its debts, liabilities, salaries to its manpower, utilities bills and financial commitments. It has not paid its gas bills to SSGC, resulting reduction in gas pressure since June 10, 2015,” the official added.
He said the managing director of the firm selected by the PML-N government has been lobbying for over three weeks with the ministries of finance, privatisation and production for a bailout that could also take care of gas supply disconnection but in vain.
After repeated notices for payment, the Sui Southern Gas Company Limited reduced gas pressure to PSM to a level it could not run its plant on June 10. The PSM official said the SSGC bills of Rs35bn were exaggerated as actual dues stood at around Rs17bn and the rest were penalties which should have settled between the two government entities with the intervention of the federal ministries.
These sources said the PSM management was now encouraging the worker unions to go on streets to attract attention of the public and the government to resolve the crisis.
Privatisation Minister Muhammad Zubair and PSM spokesman Shazim Akhtar did not respond to phone calls and text messages for their input.
The government had appointed Maj Gen (Retd) Zaheer Ahmed Khan as chief executive of the PSM in April last year to turnaround the company.
On the recommendation of a ministerial committee led by the privatisation minister, the CEO of Pakistan Steel was provided with a Rs18.5bn bailout package the same month with a commitment to attain 77pc operational capacity utilisation by January 2015 — a stage where the mill was anticipated to earn monthly profit of Rs38 million.
This did not materialise as promised to the Economic Coordination Committee of the Cabinet and instead achieved only 16pc capacity utilisation by January 2015 against the target of 77pc. The liabilities also could not be liquidated due to the production of items for which orders were not taken from the dealers as the inventory of one non-saleable item — Hot Rolled Products — piled up.
Under such a situation, PSM management had two options, either to pay the SSGC bills or to execute a planned shutdown of the plants. None of the two were taken up and the plant was kept on heating mode.
Insiders said the there was no problem with the plant and the machinery despite being run on off-specification raw material and non-maintenance since 2007, but the chief executives appointed by successive governments without relevant experience and background exposure played havoc with the machinery.
On top of that, most of the members of the board of directors also lacked professional qualification to guide the management. In fact, the PSM is without a board for almost two years now.
To add to the woes, the PPP government regularised in October 2010 the appointment of 4,732 daily wage workers, adding financial burden of Rs3bn per year to an organisation already financially bankrupt. All inquiries by investigation agencies and cases with courts regarding corruption could not find any outcome.
PSM losses that stood at Rs26bn at the end of 2008 have now increased to about Rs325bn including Rs160bn losses and Rs165bn payable debt liabilities.
Published in Dawn, August 6th, 2015
Pakistan Steel seeks Rs5bn to avert complete shutdown - Pakistan - DAWN.COM
I distinctly remember some member telling me a couple of weeks back that PSM was thriving at the moment under the able and experienced leadership of The Prime Minister of Islamic Republic of Pakistan HE Mian Muhammad Nawaz Sharif.
Oh well...
“Mismanagement and corruption has led the country’s largest industrial complex to a virtual shutdown. It’s already on its last leg of life, breathing on ventilator,” a senior official of the Ministry of Industries and Production told Dawn. “This is unprecedented in the history of any metallurgical plant in the world to have run on heat-mode for so long,” he added.
“It is unable to pay its debts, liabilities, salaries to its manpower, utilities bills and financial commitments. It has not paid its gas bills to SSGC, resulting reduction in gas pressure since June 10, 2015,” the official added.
He said the managing director of the firm selected by the PML-N government has been lobbying for over three weeks with the ministries of finance, privatisation and production for a bailout that could also take care of gas supply disconnection but in vain.
After repeated notices for payment, the Sui Southern Gas Company Limited reduced gas pressure to PSM to a level it could not run its plant on June 10. The PSM official said the SSGC bills of Rs35bn were exaggerated as actual dues stood at around Rs17bn and the rest were penalties which should have settled between the two government entities with the intervention of the federal ministries.
These sources said the PSM management was now encouraging the worker unions to go on streets to attract attention of the public and the government to resolve the crisis.
Privatisation Minister Muhammad Zubair and PSM spokesman Shazim Akhtar did not respond to phone calls and text messages for their input.
The government had appointed Maj Gen (Retd) Zaheer Ahmed Khan as chief executive of the PSM in April last year to turnaround the company.
On the recommendation of a ministerial committee led by the privatisation minister, the CEO of Pakistan Steel was provided with a Rs18.5bn bailout package the same month with a commitment to attain 77pc operational capacity utilisation by January 2015 — a stage where the mill was anticipated to earn monthly profit of Rs38 million.
This did not materialise as promised to the Economic Coordination Committee of the Cabinet and instead achieved only 16pc capacity utilisation by January 2015 against the target of 77pc. The liabilities also could not be liquidated due to the production of items for which orders were not taken from the dealers as the inventory of one non-saleable item — Hot Rolled Products — piled up.
Under such a situation, PSM management had two options, either to pay the SSGC bills or to execute a planned shutdown of the plants. None of the two were taken up and the plant was kept on heating mode.
Insiders said the there was no problem with the plant and the machinery despite being run on off-specification raw material and non-maintenance since 2007, but the chief executives appointed by successive governments without relevant experience and background exposure played havoc with the machinery.
On top of that, most of the members of the board of directors also lacked professional qualification to guide the management. In fact, the PSM is without a board for almost two years now.
To add to the woes, the PPP government regularised in October 2010 the appointment of 4,732 daily wage workers, adding financial burden of Rs3bn per year to an organisation already financially bankrupt. All inquiries by investigation agencies and cases with courts regarding corruption could not find any outcome.
PSM losses that stood at Rs26bn at the end of 2008 have now increased to about Rs325bn including Rs160bn losses and Rs165bn payable debt liabilities.
Published in Dawn, August 6th, 2015
Pakistan Steel seeks Rs5bn to avert complete shutdown - Pakistan - DAWN.COM
I distinctly remember some member telling me a couple of weeks back that PSM was thriving at the moment under the able and experienced leadership of The Prime Minister of Islamic Republic of Pakistan HE Mian Muhammad Nawaz Sharif.
Oh well...
