PSM plan hamstrung by investor concerns over future litigation
PSM plan hamstrung by investor concerns over future litigation

ISLAMABAD: Privatisation Commission (PC) is reportedly facing a catch 22 situation with respect to privatisation of up to 74 per cent equity stake of Pakistan Steel Mills (PSM) as investors are worried about litigation in future, well-informed sources told Business Recorder.

However, Minister for Privatisation, Mohammad Mian Soomro who met with investors in Karachi had assured that the entire process is being run with utmost transparency and all the decisions are deliberated and approved from PC Board, Cabinet Committee on Privatisation (CCoP) and Federal Cabinet.

The sources said, few investors who had expressed interest in the PSM previously are again on the pitch, adding that one of the investors has also deposited earnest money, which is a reflection of the level of interest of investors.

The stakes of PSM will be offered in the name of Steel Corp (Pvt) as the decision makers have noted the position regarding Key Operating Assets and corresponding Fair Market Valuation (FMV) for proposed transfer of core assets to new subsidiary, as narrated in the Audited Financial Statement of PSMC for period ending Dec 31, 2020 including list of Key Operating Assets (KOA) and Core land comprising 1229 Acres as determined by the PSMC Board.

The PC Board was apprised that the Cabinet Committee on Privatisation (CCoP) on August'10, 202'1 has approved the PSMC Transaction Features and directed the Privatisation Commission (PC) to invite the Expression of interest (Eol) from interested parties for revival of PSMC, after filing of Scheme of Arrangement (SoA) with SECP by PSMC.

The CCoP decision was ratified by the Federal Cabinet on August 17, 2021. Therefore, in terms of Sr (ii) of sub-clause (8) of clause (3) of the PC (Delegation of Powers) Regulation 2002, approval/decision of the PC Board is required for Pre-Qualification Criteria for Pre-Qualification of the prospective bidders.

Accordingly, draft "Request for Statement of Qualification (RSoQ)" containing pre-qualification criteria, eligibility requirements and basis for disqualification and draft Eol, wherein minimum information required for submission of EoI by the interested parties was placed before the PC Board for consideration/ approval.

The RSoQ and Eol was discussed threadbare and queries of the Board members were duty responded to by the PC Management and FAC. Timelines for submission of Eol, issuance of RSoQ and submission of SoQ by the interested parties were also discussed by the Board members.

The PC Board approved the "Request for Statement of Qualification containing pre-qualification criteria, eligibility requirements and basis for disqualification and draft EoI for Pakistan Steel Mills Corporation (PSMC) transaction, with minor corrections in 2.1.1(e) & (g) and 3.4.1(a) and 3.10.

The PC Board also decided that interested parties shall submit EOI within 30 days from the date of first advertisement and may submit SoQ within 45 days from the date of publication of first advertisement. PC may consider extending the date of submission of SoQ, if requested, and proper justification is provided by the interested parties.

The sources said, the administrative questions raised by the investors during back to back meetings, can also be addressed by the Ministry of Industries and Production.

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