ISLAMABAD: Pakistan Steel Mills (PSM) that often grabs headlines for rampant corruption supervised by the ruling elite, has seen production on the decline, dipping from 82% in 2007-08 to 15% in 2011 and the losses incurred during this period are estimated to be Rs104 billion.
Nevertheless, the main accused are still at large with the connivance of the big guns and the investigation ordered by the Supreme Court in 2009 through a suo moto notice has also been thrown under the carpet through sidelining the honest investigators.
The PSM that remained profit-making entity for consecutive seven-year right from 2000 to 2007, took a reverse course as Zardari-Gilani government was installed and the PSM has been showing the loss since then. Now a bailout package of Rs20 billion has been requested to save this giant from bankruptcy.
A top official of the PSM acknowledged that the production had touched a new low in September when it came down to only 15 percent. While talking to The News, he said now the production rate had improved as it stands at 35 percent and is likely to increase further as one ship of coal is being imported to keep the entity running.
But, he said, the PSM can nose-dive unless the government shows seriousness in dealing with this crisis. He said the chief executive should be appointed immediately and a bailout package should be announced.
He said the PSM has to spend one billion rupees every month under different heads, whether the entity is making any profit or running into losses. According to the official figures obtained by The News, the PSM production attainment was 82% of capacity utilization in the year 2007-08.
It experienced a decline to 64% in 2008-09, and further to 40% in 2009-10. In the following year, 2010-11, the production remained 35% mostly due to shortage of raw material like iron ore and coal etc that was further declined to 25% in July, 26% in August and 15% in September, 2011.
In terms of profit, the PSM had it last time in 2007-08 when it fetched Rs2.38 billion whereas the following years saw the mill continuously running into loss with no let up as it recorded a loss of Rs26.53 billion in 2008-09, Rs11.52 billion in 2009-10 and Rs11.49 billion in 2010-11. The loss incurred in the first three months of the running financial year has been recorded to the tune of Rs4.30 billion.
The PSM’s immediate/deferred payments liability of Rs60 billion (as of September 2011) are in addition to the losses suffered in the present regime. Besides, the PSM faces damages claims of Rs10 billions filed in different courts by the contractors, dealers and suppliers.
Instead of turning it into a profit-making entity, the present government regularized the services of 4,732 contractual/daily-wages employees at a time when the mill is virtually closed.
According to officials privy to the situation, presently, only 25% mill is functional that should have at least been 60% as the closure has an adverse impact on the machinery that could add further loss into billions of rupees.
Now after bringing the PSM at the verge of collapse, a request has been forwarded for Rs20 billion bailout package, to procure the raw material required for production and other immediate payable liabilities. The PSM has submitted a proposed budgetary five years business development plan through its Board of Directors to the Ministry of Production which says that this bailout package could help revive the mill in next five years and this is the only viable solution.
Source: