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The National Assembly Standing Committee on Privatisation, which met under
the chairmanship of Syed Mohammad Asghar Shah, MNA here today, was briefed by
Dr. Abdul Hafeez Shaikh Federal Minister for Privatisation & Investment and
General (Retd) Abdul Qayyum Chairman PSMC regarding the privatisation process,
financial and manpower restructuring.
In a detailed briefing the Committee was informed that buyers have started due
diligence in the first week of December 2005 after the opening of virtual and
physical data room while site visits and management Q & A were in progress
from December 12, 2005. PC received 19 EOIs from local and international
investors and among them 13 submitted Statements of Qualification.
The pre-qualification committee pre-qualified nine parties, which included
1.Aljomaih Holding Company (Saudi Arabia), 2. Al-Tuwairqi Group Of Companies,
Kingdom of Saudi Arabia with Arif Habib Group of Companies, Pakistan, 3.
Azovstal Steel/ System Capital Management (Ukrine), 4. Government of Ras
Al Khaimah (UAE), 5. International Industries Ltd (Pakistan) and Industrial
Union of Donbass (Ukrine), 6. Magnitogorsk Iron & Steel Works Open JSC,
Russia, 7.Nishat Mills Limited and D G Khan Cement Company Ltd (Pakistan),
8.Noor Financial Investment Company, Kuwait and 9.Shanghai BaoSteel
Group Corporation, China, the Committee was informed.
Dr. Abdul Hafeez Shaikh Federal Minister for Privatisation & Investment said
that despite the process of privatisation being difficult one having powerful
opponents who did not want to lose their empire, we were endeavoring to bring
speed in the process. He said that PSMC required fresh investment. 10 %
shares of PSMC have been allocated for the workers, he added.
The Privatisation Commission has offered to qualified strategic Investors
interested for acquiring 51- 5% equity stake in Pakistan Steel Mills
Corporation (Pvt.) Ltd. ("PSMC" or the "Company"), together with management
control, on an 'as is, where is' basis. A consortium led by Citigroup Global
Markets Limited is advising the PC on the sale.
The members were informed that PSMC has never achieved the designed
capacity, which was commissioned in 1985. It has existing production capacity
of 1.1 million tons per year where as upto December 2005 its production
declined and remained at 47 million tones and might increase by 75
million tones by the end of the current fiscal year, which would be less
than the figure of 89 million tones of previous year. The present Steel
consumption in Pakistan is 8.8 million tones and PSMC production is 22.5 %
of the total country's consumption. It did not produce specialty steel and
was not a strategic unit, the meeting was informed.
Giving an over view of the financial position, the Committee was informed
that heavy tariff protection was provided to PSMC upto 70 % import duties in
the past, which was presently 5-10%. PMSC never declared dividend and its
accumulated losses were Rs. 9.3 billion upto 1999-2000. For the first time
in 2000-2001 the plant turned around and made profit of Rs.600 million. PSMC
achieved highest operating profit of Rs.6.7 billion in 2004-05 because of
financial and manpower restructuring and higher international prices.
Referring to the upcoming requirements for the expansion and enhanced
capacity, the members were informed that an investment of US $ 1.2 billion was
required for the expansion of the unit to achieve minimum 3 million tones
capacity while another investment of around Rs. 12 billion was required
for renovation of Coke Oven Batteries (COB) and other areas. It was also
clarified that only 4457 acres core land of PSMC i.e. 23 % of the existing one
would be transferred to the successful bidder.
The meeting was further informed that Employee Management Group has also
been allowed to participate as bidder on parity basis with other bidders
subject to fulfillment of eligibility criteria and CCOP's approved parameters.
PSMC has now 13,054 permanent employees whereas it soared in the past to
23,500 as against industry norms. A total of 6217 employees have so far been
relieved through Voluntary Retirement Facility (VRF), medial retirement
benefit scheme and were paid Rs.4. 098 billion.
The Chairman PSMC informed that in 1999 sales were worth Rs.14 billion,
which now stood at Rs.32.2 billion. The raw material was being imported from
Australia, Canada, India and Iran whereas no Iron ore mine has been discovered
so far in the country. However, the private sector was being involved
for exploration activity in the prospective areas of Nokundi, Dilband in
Baluchistan, Chichali in Mianwali, Chiniot and Noshehra.
The members opined that this committee has vital role to play in the
development of the country, therefore, efforts should be made to privatise the
public sector entities with speed enabling the corporate culture to flourish.
While appreciating the good job done by Dr. Abdul Hafeez Shaikh they
stressed the need to ensure the welfare and rights of workers and the
interests of other stakeholders by selling it to credible investor for
revamping and expansion of PSMC.
The Members of the Committee MNA's Ms. Fauzia Wahab, Mr. Ijaz Ahmad
Chaudhary, Ms. Gul-e- arkhanda, Dewan Syed Jafar Hussain Bokhari, Khawaja
Mohammad Asif, Qari Muhammad Yousaf, Mr. Ghulam Murtaza Satti, Secretary PC
Mr. M. Tahsin Khan Iqbal and senior officials of PC were present during the
meeting.