The parliamentary committee probing the last year collapse of Pakistan Steel Mills (PSM) has recommended the government to consider privatisation of the state-owned organisation if its financial situation does not show any signs of improvement.
The probe conducted by the sub-committee revealed that in spite of a sharp decline in sales from 5.052 billion rupees in July 2008 to 1.62 billion rupees in November the same year, huge quantity of high priced raw material was imported unnecessarily and stored.
It was also exposed in the report that exorbitant increase in general administrative expenses was a result of collective bargaining agreements which shows that salaries and expenses were doubled when products of PSM were soled for less than their prices at which raw material was being purchased. Moreover, no efforts were made by the Ministry of Industries to convince the PSM to re-negotiate raw material and freight charges.
"The ministry played the role of a silent spectator throughout the crisis. It was depressing to note for the members of the committee," the report commented. The report also revealed that an amount of 10.3 billion rupees was borrowed from Employees Welfare Fund and this money has not yet been returned which may jeopardise the future payments to employees during their retirement year.
The sub-committee also observed that the PSM management had miserably failed to re-negotiate contracts for import of raw material and freight under the pretext that no provision of negotiations are allowed in Public Procurement Regulatory Authority rules.
The probe found out that the sale of billets to certain specific enterprises "Al-Abbas Group" was dramatically increased even when the capacity utilisation of the PSM was on decline in year 2008-09. "If the government does not bring significant changes in the management, then it should consider privatising this national asset in a transparent manner," the Senate Standing Committee on Industries observed in its report after months of parliamentary investigations into the PSM matters.
But a sub-committee that was directly involved in conducting this inquiry has suggested the government to take some urgent steps in a last ditch effort to bring a turn around in the PSM before going for the privatisation options. "It has to be the last resort and should come after every other attempt fails," said Senator Haroon Akhtar Khan, who led the probe as head of the sub-committee formed few months ago by the main panel.
The measures the sub-committee recommended before considering a sale out include the immediate termination of the PSM's present management and its replacement with what the committee called professionals having proven track records of turning around a bankrupt company.
It has also recommended the government to stop injecting more money into the PSM in the name of cash support because, the panel observed, it will not improve the present financial position and may go in waste. The sub-committee feels that efforts should be made to improve the present position and make it a profitable enterprise. The main committee headed by Senator Ishaq Dar has given two weeks to the Ministry of Industries to consider the recommendations of the sub committee.