PSM employees’ golden handshake

PSM employees’ golden handshake

Economic Coordination Committee (ECC) of the Cabinet in its meeting on Wednesday, chaired by Advisor on Finance Dr. Abdul Hafeez Sheikh, approved final and full “human resource rationalization plan” for Pakistan Steels Mill (PSM). For this purpose Ministry of Industries had sent a revised summary seeking layoff of all 9350 employees of this state enterprise, which had remained closed for the past five years but was devouring billions of rupees of taxpayers’ money annually. The terminated employees will get golden handshake of Rs.2.3 million each, for which an allocation of Rs.20 billion shall be made. Previously, in the ECC meeting of May 13, an approval of 8000 employees’ layoff was accorded at cost of Rs.18.7 billion.

PSM was one of the 56 bleeding public sector corporations that accrue annual losses of Rs.400 billion. The Privitisation Commission was unable to decide the fate of PSM. Now, the ECC decision taken on the revised summary of Ministry of Industries will pave the way either for its total privitisation or rehabilitation, modernization and expansion under public-private partnership. Running of such entities on profitable basis require an efficient management and sustained linkage with downstream industries. Ironically, PSM was overstaffed with political appointments of appointments in addition to hiring incompetent and non-professional managerial cadres. It was the placement of efficient and apolitical management in 2000 that made it a profit earning industrial enterprise in the public sector. However, it started making huge losses since 2008 and had to be closed in 2015.

The track record of privitisation of state owned entities is not an enviable one. Always the sale of profit earning enterprises got precedence over the huge losses incurring ones. When PSM was earning annual profit of Rs.400 million an attempt was made by former Prime Minister Shaukat Aziz led PML-Q government to sell out it on $270 million. But the move did not materialise because of timely judicial intervention. However, 25 percent shares of another profit earning public sector commercial enterprise, PTCL were sold to UAE Telecom Company. The management control was handed over without meeting the criteria of purchase of 51 percent shares for acquiring management control. The dispute over payment of outstanding amount of $800 million was not resolved by successive governments.

 In the first and second tenure of PML-N government, a number profit earning state entities were sold out at throw away price. The arrears of sales proceeds are yet to be paid by the buyers. . An amount of Rs.4 billion is still outstanding against the buyers of 14 public sector industrial units the ownership of which was acquired in the first two tenures of PML-N governments.

The present government took up the issue of stuck PTCL arrears and Etisalt has offered to settle the outstanding claim of Pakistan for $250 million.The actual amount that has remained outstanding is three times more than the Etisalt offer for dispute resolution. It remains to be seen as to whether government succeeds in recovering the full outstanding amount or holds negotiations with the UAE Telecom Giant for striking a middle ground.

The ECC set up a body to explore various call options for import of petroleum products on hedged prices, while capitalising on the prevailing glut in global oil market. The proposal was under consideration since the recent oil market crash. Import of crude oil and petroleum products on hedged prices for building strategic oil reserves will need construction of onshore storage facilities.  Over the past five decades, expansion in onshore oil storages has never been a priority of successive governments. The storage cost in offshore facilities is very high. Pakistan could have avoided petroleum crisis in 2015 had there been enough onshore storage capacity in the country. Unfortunately, lesson has not been learnt from that crisis either by default or design. Even in the present government, Petroleum Division is least bothered to conceive any programme of building onshore storages for additional quantities of crude oil and petroleum products. The same attitude had been shown for setting up at least another oil refinery, preferably near to operational oil fields of Karak ,Skardara and Gurgury in Khyber Pukhtunkhwa. Let us hope that bureaucracy of Petroleum Division will rise from deep slumber and give priority to expansion in onshore storage facilities commensurate with the future demand of petroleum products in the country.

Posted in