How sell-off of PSM can be forestalled

Muhammad Zubair, minister of state for privatisation, said privatisation of Pakistan Steel Mills (PSM) can only be averted if PSM turns into profitable organisation. He was speaking at an interactive session on "Privatisation Policy and Priorities" organised by Pakistan- Korea Business and Friendship Council along with seven other business councils at a hotel here on Saturday.
He said that around 2500 employees in PSM were middle and inter pass and urged the participants to come forward and turn PSM around, if they want to stop its privatisation. He said that privatisation policy was aimed at avoiding heavy spending in public enterprises, adding that government was paying around Rs 500 billion per annum to run loss earning public organisations.
Zubair further said that if this amount was poured in health, education and other sectors, it would create a difference and added that people of Pakistan, who were entitled to get better services, were being burdened because of these loss earning public entities. He said that Nawaz government was committed to its privatisation policy and they had no IMF pressure in this regard. He said: "IMF has set milestones for its programme and government is striving to achieve it but it doesn''t mean that we are taking dictations from IMF".
In his welcome address, Ahsan Mukhtar Zubairi, chairman Pakistan Korea- Business and Friendship Council said that state owned enterprises (SOEs) were inefficient and generally slow in responding to public demands. On the other hand, private sector is driven by profit motive and it becomes ruthless in the pursuit of personal gain and profit. A proper balance needs to be struck between public interest and profit, he urged.
He said that Pakistan had experimented with privatisation during the last three decades. Over a 100 state owned enterprises have been sold to the private sector during the last 30 years. Many of these do not exist any more. Mostly expensive real estates have been sold at exorbitant profits and the state and the public have been deprived. Many SOEs have been sold at throw away prices. The case of HBL, UBL, ABL and PTCL can not be forgotten. The Privatisation Commission (PC) had followed all procedures well but government was deprived of its valuable assets, he said. Some privatisation''s have also gone well such as MCB and only a few others.

^{Source: Business Recorder}

PSM all set to allow its commercial use

Pakistan Steel Mills (PSM) is all set to allow commercial utilisation of its jetty/ Iron Ore and Coal Berth (IOCB) after getting formal approvals from the Ministry of Ports and Shipping and Federal Board of Revenue (FBR), sources close to acting CEO PSM told Business Recorder on Sunday. The source said the commercial utilisation of Pakistan Steel''s IOCB had been under consideration of the Ministry of Industries and Production for quite some time.
The Ministry directed the PSM management to constitute a committee to examine the possibility of commercial utilisation of surplus unloading capacity of IOCB as well as to develop tender documents for competitive bidding in this regard. The committee''s report was submitted to the Ministry on 2 October 2013. Subsequently, the issue was placed before the PSM board in its last meeting which also gave clearance to the proposal.
Giving details, sources said that Pakistan Steel''s jetty had been obtained from Port Qasim Authority (PQA) for exclusive use to unload imported basic raw materials from ships ie iron ore and coals etc required for its operational needs.
The unloaded raw materials from ships are transported through a dedicated 4.5-km-long conveyor system and stacked at discharging end in operational yards situated within the main plant area of Pakistan Steel. Therefore, having no other alternate arrangement, the availability of the jetty (IOCB) is vital for exclusive use of Pakistan Steel as its operations totally depend on the smooth and uninterrupted unloading of required basic raw materials.
As the ownership of the jetty rests with the PQA, fixed charges of Rs. 277 million per annum are paid by the Pakistan Steel to the PQA, irrespective of tonnage of raw material unloaded. Besides, around Rs 150 million per annum is incurred on the salary/wages of the employees working at the jetty. About Rs 50 million is spent annually on maintenance of equipment and protection of steel structure from corrosion etc.
Keeping in view the above mentioned existing status of the jetty (IOCB) and considering the case under the Risks Mitigation Strategy, the window of opportunity for the commercial outsourcing of surplus capacity of the jetty exists till such time Pakistan Steel operates on less than 90 % capacity utilisation. At present, this period can be taken as one year. The prospect of further commercial outsourcing of surplus capacity of the jetty (IOCB) may be considered from the perspective of Pakistan Steel''s enhanced capacity operation and its expected further expansion from 1.1 mtpy to 1.5 mtpy in Phase-I and up to 3.0 mtpy in Phase-II.
Based on possible surplus capacity against 1.1 mtpy capacity of PSM, a financial feasibility has been prepared for one year. The Request For Proposal (RFP) document mentioning necessary terms and conditions for tendering purpose to invite proposals from potential bidders/firms has also been prepared.
The following prerequisites are also mentioned for consideration prior to finalisation of the contract with any successful bidder. The present bulk material handling capacity at the jetty may only cater for Pakistan Steel''s raw material needs for its operation at around 80-90% capacity. Reasons are as under:
Both ship unloaders are in operation for the last 32 years and each of them has completed more than 140,000 hours operational life against designed operational life of 60,000 hours. As per past record of 32 years, the average achieved unloading rate remained 510 tons per hour.
The intercepting conveyor network after Junction No.1 and unloading/stacking machines in primary stock yard (PSY) of Raw Material Handling Department (RMHD) and coal handling yard of Coke Oven & By Product Plant (COBP) have also completed more than 32 years of service life.
In case of increased work load, the wear/tear of the jetty and its installations, conveyor networks and stacking machines will increase, leading to increased frequency of breakdowns, and interruptions in supply of raw material to Pakistan Steel.
It is assessed that with effective maintenance on regular basis the existing unloaders and allied conveyor network and machines will be capable of unloading about 50 ships annually, each having capacity of 50,000 tons+ 10%. Some ships of smaller size carrying 10,000 to 20,000 tons of cargo are also unloaded which increase the operational time and lower the unloading rate. The existing maximum draught of the jetty (IOCB) is 11.5 meters at which ships carrying more than 55,000 tons of cargo cannot be handled.
The sources said, since ownership of the jetty and the responsibility for provision of night navigation facility, increase of draught for berthing of larger size vessels, besides civil maintenance and strengthening of the jetty (IOCB) rests with the PQA, the commercial utilisation of the jetty has to be fully agreed to and supported by the PQA. Moreover, being a government organisation, Pakistan Steel is paying subsidised charges to the PQA. Rates for commercial utilisation of jetty (IOCB) may have to be negotiated with the PQA.
The PSM is yet to resolve the following issues; (i) fate of Service Agreement signed by Pakistan Steel with M/s. Tuwairqi Steel Mill;(ii) NOC from PQA; and (iii) liaison with custom authorities to declare the private ware house for storage of commercial cargo as custom bonded warehouse. 
Source: Business Recorder