A cabinet body on Tuesday approved to split the Pakistan Steel Mills (PSM) into two companies and decided to sell majority stakes of the new good company amid growing frustration within the government over lack of progress in its privatization.
Headed by Minister for Finance Shaukat Tarin, the Cabinet Committee on Privatization (CCOP) “approved the proposal to issue the scheme of arrangement as requested by Privatization Commission (PC) and approved by the PC board,” announced the Ministry of Finance.
However, the statement is contrary to the fact, as the CCOP made a major change in the PC board approved transaction structure by deciding to retain the ownership of the new good PSM –the Steel Corp Private Limited – officials told The Express Tribune.
The PC board and the Ministry of Industry had proposed that the Steel Corp ownership should rest with the PSM Corporation aimed at keeping a “corporate veil” to avoid international litigation.
However, Shaukat Tarin decided as the CCOP chairman that the federal government should retain the ownership of the Steel Corp too to get a good bid price.
Some committee members objected to the decision to retain the Steel Corp ownership while arguing that it could expose the government to international litigation as had happened in the past.
The federal government had to pay $10 million to a foreign supplier of the defaulter PSM after a ship of the Pakistan National Shipping Corporation was stopped in South Africa to claim money.