PSM Saving Over Rs. 240 Million a Month due to Employees’ Retrenchment

In the wake of the Pakistan Steel Mills (PSM) privatization process, 5,670 employees have been retrenched so far which resulted in reducing the burden of salaries from Rs. 360 million to Rs. 112 million per month, resulting in a saving of more than Rs. 240 million every month.

Official documents of the Ministry of Industries and Production revealed that almost 3,600 employees are presently working at PSM.

PSM has also paid off liabilities of international and local creditors to the tune of Rs. 3.714 billion from its own funds. Savings of Rs. 240 million per month have been accrued in the books of accounts on account of employees’ net salary. After the privatization process the entity will become profitable due to foreign experienced private sector partner, the ministry added.

The government has been making continuous efforts for the rehabilitation of PSM. To revive PSM, the Economic Coordination Committee (ECC) of the Cabinet in its meeting in May 2019 passed directions to place PSM on the privatization list and directed Privatization Commission (PC) to appoint Transaction Advisory Consortium (TAC) for the revival of PSM through advice to the government on a set of appropriate privatization modes, as per the law.

The financial advisor i.e. Bank of China International Consortium was appointed by the Privatization Commission (PC). The financial advisor had carried out due diligence in consultation with the PC to find out the best possible option for the revival of PSM.

After thorough deliberation, the advisor had proposed a transaction structure model suggesting transferring of Identified Core Operating Assets into a wholly owned subsidiary of Pakistan Steel Mills Corporation (PSMC) through a Scheme of Arrangement (as provided in the Companies Act, 2017).

In order to formalize the proposal, PC moved a summary for the approval of the proposed transaction structure. The Cabinet Committee on Privatization (CCoP) has approved the creation of a new subsidiary/company as part of the transaction model in which assets of PSM shall be transferred.

The privatization process of PSM is led by the PC. Expression of Interest (EoI) was published and finally after due process, the four Chinese companies were shortlisted as prospective bidders.

One of these four companies, Baosteel Group visited PSM in June, while a four-member delegation of another shortlisted company Tangshan Donghua Iron and Steel Enterprise Group met with different stakeholders in Islamabad during their visit in August.



Get Alerts

Follow ProPakistani to get latest news and updates.


ProPakistani Community

Join the groups below to get latest news and updates.



>