PSM, however, maintained that the previous bailout packages could not produce positive results because the federal government gave funds piecemeal instead of the entire amount at one go, and mismanagement and poor planning were also factors in the failure of the PSM to be revived. According to sources, PSM Board has sought a clarification from Privatisation Commission whether it is interested in new business plan of PSM or not. "Give a clear decision: should the Board prepare a business plan or not? Are you interested in the revival of the mills? If the government has to privatise the mills, then why should the Board focus on developing a business plan? Sources quoted Board members as hurling questions at the PC representatives.
The sources said, PC and PSM officials have held meetings with the management of National Bank of Pakistan and Sui Southern Gas Company Limited (SSGCL) to clear their liabilities and it depends on Secretary Privatisation Commission, Shahid Mehmood, as to how he deals with it. The Board has taken a principled decision that the possible liabilities of NBP and SSGCL will be adjusted against 3000-3500 acres of PSM land as the Board has no power and direction from the government pertaining to PSM's future roadmap.
The Board's Business Development Committee had prepared a new business plan of Rs 32 billion of which PSM would raise Rs 22 billion from banks to clear a portion of liabilities belonging to SSGC, K-E and for expense on other minor items, whereas Rs 10 billion would be obtained for value addition. Of this, the government will extend RS 5 billion from its resources. This would be the sixth bailout package to revive the mills, if approved.
The sources said BDC will again consider the Mills revival plan with reference to 2 parties as Russian and Chinese have shown an interest with credit finance proposals. Both proposals will be put before the Board in its next meeting. The government has spent more than Rs 225 billion to privatise the Mills but did not consider its revival as suggested by the Financial Adviser in 2015 and proposed by the employees of PSM in their letter in July 2013.
The government of Pakistan did not utilise $ 95 million credit from the then USSR which was unutilized and lapsed after 10 years in 1995. An MoU was signed in 2003 between Russia and Pakistan during the visit of the then President, Pervez Musharaf, to Russia and the estimated amount of $ 160 million to enhance the production capacity from 1.1 MTPY to 1.5 MTPY was submitted to PSM which was not considered seriously and Mills' privatisation process was initiated in 2005.
PSM invited expression interest for completion and expansion of the Mills production capacity in 2010. Ten parties participated but no decision was taken by the PPP-led coalition government which then initiated a process for public private partnership.
Copyright Business Recorder, 2017