Cabinet committee orders to expedite EoIs process for PSM

Shahnawaz AkhterWeb Editor

11th Aug, 2021. 10:58 am
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ISLAMABAD: Federal Minister for Finance and Revenue Shaukat Tarin has directed the Privatisation Commission to expedite the process of soliciting expression of interest (EoI) for Pakistan Steel Mills Corporation (PMSC) and try to close the transaction at the earliest.

Presiding over the meeting of the Cabinet Committee on Privatisation (CCoP) held at the Finance Division, Tarin appreciated the efforts of all the relevant ministries/departments for their valuable contribution.

The meeting approved the proposal to issue the scheme of arrangement as requested by the Privatisation Commission and approved by its board. The committee examined the substantive arguments for proceeding further with reference to the transaction structure for the revival of Pakistan Steel Mills.

Privatisation Commission secretary briefed the meeting about the progress made with reference to the decisions taken during the last meeting of the committee held in June 2021.

In July, the Privatisation Commission Board had deferred the approval of transaction structure for the sale of PSMC, owing to differences over the classification of its core and non-core assets, which will be handed over to the new buyer.

The board was handicapped to take a decision after it found that some of the operating assets had been described as non-core assets by the valuator.

The board members were also divided on whether the government should sell up to 75 per cent assets being transferred to a new PSM subsidiary, Steel Corp Private Limited, or opt for the sale of 100 per cent stake.

The board’s inability to approve the transaction structure highlights the challenges being faced by the government in forwarding its privatisation programme.

In the past three years, the government has only sold barren land with no significant completed privatisation transaction.

Sources in the Privatisation Commission said as of December 2020, PSM’s total assets had been reassessed at Rs560 billion, including Rs536 billion fixed assets. The fixed assets include Rs351 billion worth of land, Rs42.8 billion factory building and Rs99.60 billion for plant and machinery.

The liabilities are assessed at Rs308.20 billion. These include Rs42 billion trader and payables, Rs73 billion interest accrued and Rs71.50 billion current long-term financing.

In addition to that there are Rs59.50 billion long-term financing-related liabilities, Rs9.8 billion gratuity scheme, and Rs41.70 billion deferred tax liabilities.

Of these, Rs35.80 billion deferred tax liabilities will be transferred to the new subsidiary that will subsequently be given to the new buyer.

In May, the board of directors approved and directed the management to carve out the total assets of Rs133 billion and the total liability and revaluation reserves of Rs123.50 billion and transfer to the wholly-owned subsidiary.

The Rs88.50 billion worth of plant and machinery had been proposed to be transferred to the subsidiary, Rs41.50 billion worth of building and structure, Rs1.2 billion utility connections and Rs826 million deferred tax assets.

Federal Minister for Industries and Production Khusro Bakhtyar, Adviser to the Prime Minister on Institutional Reforms and Austerity Dr Ishrat Husain, Federal Minister for Privatisation, Mian Muhammad Soomro, federal secretaries, Securities and Exchange Commission of Pakistan (SECP) chairman and other senior officers participated in the meeting.

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