KARACHI – Pakistan is planning to outsource the management of Pakistan Steel Mills (PSM) to improve inculcate professionalism in the important organisation, which under the present management team is facing a loss running billions of rupees.
Ten international firms mostly from China, Russia and European countries have offered their services to turn PSM into a profitable organisation.
This was said by Federal Minister for Industries and Production Mir Hazar Khan Bijarani, while speaking to the media during “Malaysia -Pakistan Palm Oil Trade Fair and Seminar-2011”.
He said that the government is struggling to transform PSM into a profitable and dynamic business. Pakistan has received expression of interest (EoI) from ten leading companies from different countries, especially from Russia and China, for revitalisation and expansion of this very important national asset, while an independent international expert has been given the task to evaluate these offers.
A committee of specialists has also been formed to finalise and pursue the development plan of the PSM. He added that on completion of this process; work on first phase of its expansion of the organization would start, thereby utilising its annual production capacity of 1.5 million tonnes.
The minister, however, rejected the impression that the government was in effect privatising the organisation. He also denied giving any timeframe for the proposed outsourcing of the national asset.
“The only objective of the government was to make the organisation profitable as it was earlier,” he said, acknowledging that the government has earlier changed the board of PSM to bring some positive changes in the overall management of the organisation.
According to sources, the outsourcing of management would help alleviate the pressures that have been traditionally exerted and allow further investment and allow the institution to function in a more productive manner.
Another consideration in the decision to outsource management was the desire that PSM be run according to the rules of corporate governance.
It is worth mentioning here that PSM which remained a profitable business between the 2000 and 2008, but its performance has fallen in the last few years because of, sources insinuate, political influence and shortcomings of the management.
Despite all claims of the Pakistan People Party (PPP) led government, apparently the entire management of PSM is working on acting charge basis and compounding the poor performance of the organisation.
According to a report, the total equity of PSM has been wiped out and the losses running into more than Rs 48 billion in a period of 30 months (July 2008 to December 2010 with the debt liability standing at approximately Rs 50 billion, compared to only Rs 8.0 billion on 1 July, 2008.
