PSM needs Rs 32b more funds to clear liabilities

Aftab Ahmed

Closed Pakistan Steel Mills (PSM) needs Rs 32 billion more to clear its liabilities before its privatization. After June 2020, all its utility payments, including SSGC, are pending. PSM almost consumed the budget allocation of the current financial year.

The Ministry of Industries and Production informed the ECC that Pakistan Steel Mills (PSM) has a dedicated gas allocation of 41 MMCFD from SSGC to run the PSM’s plant’s manufacturing operations.

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Since the PSM PSM production activity closure, law flame gas of 2 MMCFD was being supplied to PSM primarily to preserve the Coke Oven Batteries and refractory kilns with an average monthly bill of Rs 82 million.

The Ministry further informed that PSM had re-commissioned two coke oven batteries in 2008 with the original cost of US $ 25.44l million (Rs 2010 million). Considering the existing exchange rate of 165.70, the Coke Oven Batteries’ present cost comes to Rs 4216 million.

The ministry also requested Rs 47.59 billion to cater to the requirements of PSM under different heads during the Financial Year of 2020-21. This inter alia also includes Rs 1.2 billion for the SSGC’s gas supply in the current financial year. The budgetary allocation of Rs 16 billion for PSM was made against the demand of Rs 47.59 billion.

Out of the available budget, the federal government released Rs 11.44 billion for the retired employees of PSM under the court order. The ECC had also approved the net salaries of PSM’s employees amounting to Rs 3.85 billion, leaving Rs 700 million as the balance amount.

Presently PSM was on the active list of the Privatization Commission. The retention or disconnection of gas supply of 2 MMCFD to plant was a policy decision that would be made in consultation with the Privatization Commission and Board of Investment (BoI).

The outcome of the consultation brought before the ECC in due course of time. After ECC approved Rs 350 million in Jan 2020, PSM started marking payment to SSGC that continues till May 2020. Due to lack of funds, PSM could not pay the gas bill liability after releasing partial payment of June 2020.

READ                                  Govt okays Rs 31 billion for PSM.

The Ministry stated that it had not sufficient resources to pay the entire liability of SSGC. Therefore, it requested to defer till the time of its privatization. The Industry also requested ECC to approve an amount of Rs 0.99 billion through Technical Supplementary Grant with direction to Finance Division for releasing the amount of Rs 0.411 billion (lump sum) immediately for making payment of 5 months, i.e., July-Nov 2020 to SSGC.