Pakistan Steel Mills (PSM) accumulated an overall loss of Rs. 67.167 billion in merely six months of 2020 despite laying off 5000 employees who received a golden handshake, according to officials of the Ministry of Industries and Production.
The officials of the Ministry and PSM briefed, in detail, the Senate Standing Committee on Industries and Production, which met with Senator Faisal Sabzwari in the chair at the Parliament House on Tuesday.
To a question raised by Senator Mushtaq Ahmed with regard to the audited accounts of Pakistan Steel Mills Corporation (Pvt) Limited, the Ministry officials said the total losses and liabilities of PSM had increased by Rs. 67.167 billion from June 30 to December 2020.
The officials said PSM had started production in 1985, adding that the mill made a profit of Rs 9.54 billion. They said it had been running in deficit since 2008 due to global recession and other factors. They maintained that the company suffered a record loss of Rs 26.45 billion in 2008, and from 2008 to 2014, it received about Rs. 59 billion as a bailout, but it could not be revived.
The PSM officials said PSM had so far laid off about 5,000 employees through a golden handshake. They said the case of more employees would also be looked into after receiving the funds from the Ministry of Finance. The Chairman adjourned the discussion on the matter till the next meeting due to the absence of Senator Mushtaq Ahmed.
The meeting discussed in detail the status of declaring mining as a formal industry by the Government of Pakistan. The mining sector is a provincial matter after the 18th Amendment, the Ministry officials said. They added that as far as the federation was concerned, it was looked after by the Ministry of Petroleum. “We have written a letter to the Ministry of Petroleum. As soon as the Ministry approves it, a notification will be issued to declare mining as an industry,” they asserted.
As the Chair asked what were the benefits of declaring mining as a separate industry, the officials said the industry’s status made it easier to get loans from banks and other tax matters.
The financial implications of the Standing Committee’s recommendations on steel prices were also considered in detail. The Secretary informed the committee that the services of a private firm would be sought for determining the exact production cost of steel and other commodities in Pakistan so that the prices could be accurately fixed.
Senator Muhammad Abdul Qadir asked why the price of steel was rising in Pakistan. He also asked what effect it would have on the price if the same steel was imported. The officials of the Engineering Development Board (EDB) responded that work was underway in this regard and the matter would be sorted in collaboration with the representatives of the concerned industries.
Representatives of the Pakistan Association of Large Steel Producers informed the committee that about 400 companies were currently making steel in Pakistan. They said most of the steel in Pakistan was made from imported scrap. As the price of scrap increases in the global market, so does the cost of production, which in turn causes prices to rise, they argued.
Senators Falak Naz, Saifullah Sarwar Khan Nyazee, Faisal Saleem Rehman, Hidayatullah, Ata-ur-Rehman, and Shaheen Khalid Butt attended the meeting.
