PSM’s growing pains


WEB DESK: It seems that financial difficulties of Pakistan Steel Mills (PSM) continue to increase as the time passes. On 25th Match, 2016, Privatisation Commission became still more stringent and barred the management and board of directors of PSM from seeking Rs 30 billion for the revival of the country’s largest industrial unit and asked the Ministry of Industries to look into the PSM matters directly. In a hard-hitting letter, the Privatisation Commission also accused the PSM management and its board of violating the decisions of the ECC of the cabinet and failing to “rationalise PSM employees”.

According to Sardar Sukhera, Secretary, Privatisation, the ECC had directed the PSM management on 29th January, 2016 to rationalise its employees’ strength, especially contractual and daily wage employees, considering the mill had been non-operational since June, 2015. Moreover, as the PSM was not operative due to closure of gas supply, PSM was asked to review options available under the Pakistan Commercial and Industrial Employment Ordinance, 1968 and submit the decision to the board. In this regard, an agenda of the board’s HR committee was received on 28th February, 2016 which contained no information on rationalisation of employees.

Instead, a proposal requiring additional funds amounting to Rs 30 billion for capital repairs of PSM and revival of the plant to 1.5 million tonnes per year was received. Again on March 1, 2016 the CEO of PSM was asked to prioritise and limit the agenda of the PSM board for a more meaningful contribution by all members but the working paper received by the PC on March 22, 2016 contained no information on rationalisation of PSM employees. The Secretary, PC, was of the view that the behaviour of the PSM management leaves much to be desired, given its burden on the national exchequer and this was causing unnecessary delay in the release of salaries of the PSM employees which was bound to cause embarrassment to the government.

The communication between Secretary, PC and the PSM management shows the extent of financial crisis at the steel mills and the reluctance of its management to do the right thing in order to reduce the losses of PSM that continue to mount with the passage of time. It is quite clear that PC was now exercising greater say on matters pertaining to entities on the privatisation list. Specifically, it would go against releasing salaries to the PSM employees, outstanding for three months now, in order to force the rationalisation of staff strength. It was very strange that the PSM board was still in no mood to justify the retention of a huge number of regular as well as contractual and daily wage employees despite its closure. It is difficult to understand why the PSM required contractual and daily wage employees when it was not operating.

In fact, even the strength of regular employees needs to be reduced when the mill was closed. As the previous experience indicates, the proposal requiring additional funds amounting to Rs 30 billion and the revival of the plant to 1.5 million tonnes per year also does not seem to have a chance of implementation. The PSM board, therefore, needs to be tough and realistic and have a very close co-ordination with the PC to prepare the enterprise for privatisation and reduce the burden on the budget. Unfortunately, privatisation of the PSM was stopped by the judiciary in the past but the present situation cannot be allowed to continue for long due to the need of maintaining financial discipline. The government and the opposition parties need to remind themselves that no enterprise could continue to employ its labour force if it is unproductive and continues to add to its losses. Its privatisation would be doubly difficult if the new management was bound to inherit all the old employees.

Source: Business Recorder