[www.ferro-alloys.com] Economic Co-ordination Committee (ECC) of the Cabinet has not allowed Pakistan Steel Mills (PSM) to sell unfinished inventory of Rs 5 billion to meet its financial commitments including payment of salaries, well informed sources told Business Recorder.

The federal government has imposed moratorium on sale of unfinished inventory of PSM fearing that the management will spend the earned amount on unnecessary heads.

Some officials dealing with the PSM argue that vultures are eying the inventory of Rs 5 billion but the government will not allow them to succeed in their designs.

Chief Financial Officer (CFO) PSM, Arif Sheikh was in Islamabad on September 7, 2016 when the ECC approved two month salaries and payment of Rs 322 million to pay to legal heirs of 138 employees.

The sources said current liabilities of PSM which is dysfunctional for more than a year, stood at Rs 170 billion against assets of 240 billion. The mills also own 19000 acres of land.

PSM is the largest and the only integrated steel plant of Pakistan, with an installed production capacity of 1.1 million tons per year (MTPY), expandable up to 3.0 million tons per annum. Till 2008, it had accumulated profits of Rs 9.5 billion and was a self sustainable entity. It was making timely payments of all dues to not only its employees but also to all its creditors.

However, in financial year 2008-09, PSM suffered heavy losses of Rs 26 billion due to international recession and subsequent reduction in steel prices. Since then, PSM has not been able to recover and has consistently reduced its capacity utilisation despite having given various bailout packages from year 2009 up till year 2014.

As of December, 2015, an amount of Rs 19.8 billion towards the provident fund and Rs 17.8 billion towards gratuity is payable in both the trusts. However payment to ex-employees on account of gratuity has been cleared by PSM till April 2013 and on account of the provident fund till April, 2015, from the previously available funds in the two trusts. At present, both the funds stand completely exhausted, and resultantly, there are no funds available to release payments to the retiring employees of the PSM.

Privatisation Commission had also directed the mills management which is now doing nothing except receiving financial benefits and tours to Islamabad with TA/ DA, had also been given the target to rationalise the work force and get rid of unnecessary contractual employees and daily wagers. The management has implemented as per the instructions.

The sources said PSM management has saved Rs 7 billion from July, 2015 to June 2016, of which Rs 645 million were saved from salary and other benefits, Rs 1.2 billion from electricity bills, Rs 4 billion from natural gas, Rs 313 million from water, Rs 300 million from POL and Rs 525 million from stores and spares.  **Article from Internet for reference only

• [Editor:tianyawei]