Pakistan Steel Mills (PSM) will remain closed for a few more months as the Pakistan Tehreek-i-Insaf (PTI) government has failed to prepare a revival plan within the two-month deadline, highlighting the challenges that the government is facing to deliver on its election promise of reviving loss-making state-owned enterprises.
The Ministry of Industries and Production has informed the Economic Coordination Committee (ECC) of the cabinet that the operationalisation plan for the country’s largest but closed industrial unit could not be prepared by January 7 – the last date of the deadline.
The ECC did not take decision on abolishing import duties and sales tax on cotton import to bridge the shortfall in domestic production.
According to a report in the Express Tribune, the government lacks the capacity to even prepare a viable plan and it has engaged an experts group from the private sector on a pro bono basis to do the job. The expert group, headed by Khalid Mansoor, CEO of Hub Power Company, sought three more months before it could give an opinion on whether the mill could be managed or not.
“The committee directed that the plan of action should be prepared in a cohesive manner, taking on board the PSM board of directors/management and submitted for final approval as per the given timelines,” said a statement issued by the Finance Ministry.The previous Pakistan Muslim League-Nawaz (PML-N) government had closed the PSM nearly three years ago after it could not revive the sick unit despite injecting billions of rupees.
The PTI believes that all the state-owned enterprises can be run efficiently by the professionals. Because of this notion, it has removed PSM from the active privatisation list along with Pakistan International Airlines (PIA).
The statement said the Ministry of Industries and Production shared with the meeting progress on the plan of action currently being formulated by the specially constituted expert group, suggesting viable options to revitalise PSM.
In November last year, the ECC had given the Ministry of Industries two months to submit an operationalisation plan, which ended on Monday.
The ECC was informed that since there was no in-house capacity either in the Ministry of Industries or in PSM, Adviser to PM on Commerce Abdul Razak Dawood had outsourced the job to a private expert group. It was also informed that the expert group would enter into a confidentiality agreement with the government.
The group is still working on formulating various viable options and in view of the enormity of the task and other commitments it could not complete the job within the time frame of two months, according to the Ministry of Industries.
The PTI government has also decided to set up Sarmaya-e-Pakistan company for the management of state-owned enterprises. The company will ensure that the excessive control of line ministries is taken away and political interference is removed in these state units.
Pakistan has informed the International Monetary Fund (IMF) that the board of directors of the company and its management will be in place by March 2019. After that, the first lot of companies will be transferred to the holding company.
Currently, assessments of these companies are in progress for the introduction of a state-owned enterprises law and commercialisation of these units, according to the finance ministry.
Trump wants to end special trade treatment for India
US President Donald Trump announced plans Monday to end special trade treatment for India, accusing it of unfairly shutting out American businesses, reported CNN.
In a letter to Congress, Trump signaled his intent to remove India from a program that gives developing countries easier access to US markets. The Indian government “has not assured the United States that it will provide equitable and reasonable access to the markets of India,” the letter said.
The notice comes just weeks before Indian Prime Minister Narendra Modi faces a general election.
Trump has repeatedly slammed Indian duties on US goods. In January, he took aim at India’s 150% tariff on imported whiskey. Over the weekend, he blasted India as a “high-tariff” country.
Now, he’s moving to take India out of the preferential trade program, known as the Generalized System of Preferences (GSP), which lowers US duties on exports from 121 developing countries. India was the biggest beneficiary of the program in 2017, according to US data, with exemptions on goods worth $5.6 billion.
Indian Commerce Secretary Anup Wadhawan said Tuesday that the total benefit to India from the exemptions amounted to only about $190 million a year, describing them as “minimal and moderate.”
Last April, the US government said it would review India’s eligibility in the program after some American companies said their dairy and medical device shipments to India were being hurt by non-tariff barriers.
Wadhawan said India had proposed a “reasonable and meaningful” trade package to the United States, but that the two sides were unable to reach an agreement.
“There were some additional requests beyond that, which could not be accepted at this time,” he told reporters.
Trump’s letter to Congress starts a 60-day clock before he can take action, according to a statement from the Office of the US Trade Representative. The United States also plans to remove Turkey from the GSP program, the statement said, after finding that the country is “sufficiently economically developed” and no longer requires special access to the US market.
Trump’s move to end the preferential treatment of Indian goods comes just a few weeks after US Commerce Secretary Wilbur Ross pulled out of a trip to the country at the last minute. The Commerce Department said bad weather at the time led to his flight being canceled.
The GSP isn’t the only source of tension in the two countries’ trading relationship, which was worth $126 billion in 2017.
Tensions between New Delhi and Washington have increased in recent years as Trump’s “Buy American, Hire American” strategy has clashed with Modi’s campaign to “Make in India.”
India was one of many countries hit by US steel and aluminum tariffs last year. In retaliation, the Indian government announced its own tariffs on US goods worth $240 million, but it has yet to actually put them into effect.
Wadhawan said Tuesday that India would keep the possible retaliatory tariffs out of its continued trade discussions with the United States.
PM aide’s company gets approval for Mohmand Dam project despite controversy
Even though a controversy over the bidding process persisted, the Water and Power Development Authority (WAPDA) has granted approval to award of contract for the 800MW Mohmand dam project to a joint venture of China Gezhouba Group Company (CGGC) and Descon Engineering, reportedly owned by PM’s Adviser Abdul Razak Dawood.
WAPDA also instructed the project authorities to issue a letter of acceptance as per the rules, seeking mobilisation of the contractor by next month, consequent upon signing of an agreement.
“Since no contract for such a mega-hydropower project was signed during the last 50 years, thank God finally we have awarded the contract for the construction of the Mohmand dam to CGGC-Descon JV,” WAPDA Chairman Lt Gen (r) Muzammil Hussain told a local newspaper.
“The JV [joint venture], after being asked to rationalise the cost, has deducted Rs18 billion from the total cost,” he claimed.
WAPDA says the JV had earlier bid about Rs201bn for the project’s civil, electrical and mechanical works. However, during technical negotiations the JV rationalised the cost, reducing it to Rs183bn.
Upon completion, the project will store about 1.2 million acre feet of water and generate 800MW of low-cost electricity
The civil, electrical and mechanical works include construction of the dam, other related works, and installation and successful operation of the turbines. “Actually the PPRA rules don’t allow us to go into financial negotiations regarding cost of the project. However, the JV rationalised the prices during technical negotiations and finally reduced the total cost,” Lt Gen Hussain said.
The controversy over the bidding process of the project, meanwhile, continues as the media have revealed that Descon has close links to Prime Minister’s Adviser on Commerce, Abdul Razak Dawood.
Leaders of the opposition parties, including PML-N President Shehbaz Sharif, termed the government’s act of cancelling the project’s second bidding on technical grounds “a bid to facilitate the company of the adviser”.
They also demanded of the government to review the bidding and conduct the same afresh. On the other hand, the government defended its decision, which was based on a single bid, saying the process was lawful.
WAPDA said the contract was awarded at a meeting held at the WAPDA House. “Following a comprehensive bidding and evaluation process and exhaustive technical negotiations, WAPDA at a meeting held here on Friday, accorded approval to award [of] contract to CGGC-Descon Joint Venture for civil and electro-mechanical works of the Mohmand Dam Hydropower Project,” reads a press release issued by a spokesperson for the authority.
Although under the PC-1 of the project its completion period is 68 months, WAPDA pledges to complete it within a period of less than five years.
“If all is well [proper cash flows, enabling environment, etc], we can complete it within a period of five years or even less than that. Though the contractor will mobilise to the site next month, we have already started various preliminary works — construction of the access road, geo-tech, seismic stations, etc. There is also no issue with land acquisition since we have already acquired the priority land,” the WAPDA chief maintained.
“They [landowners] are ready to surrender their land for the project. And according to them, we can start construction at any time,”
Lt Gen Hussain said the operation and maintenance of the project would be the sole responsibility of WAPDA. “We will not give O&M work to anyone, as WAPDA will do it on its own since it is a national property,” he said.
“The project will be considered to have been awarded to the JV when the contract will be signed in the near future,” said an official source.
The project is historic and unique as it will be constructed on Swat river in the Mohmand tribal district of Khyber Pakhtunkhwa. Upon completion, the project will store about 1.2 million acre feet of water, generate 800MW of low-cost electricity and help mitigate floods in Peshawar, Charsadda and Nowshera.
Govt set to privatise 49 state-owned entities in five years
The Pakistan Tehreek-e-Insaf (PTI) government has decided to privatise 49 state-owned entities over the next of five years.
According to a plan presented by Federal Privatisation Secretary Rizwan Malik, eight public entities including the Lahore Airport would be privatised during the first phase of the plan.
Other institutions included in the first phase are Haveli Bahadur Shah, Balloki Power Plant, First Women’s Bank and SME Bank.
Malik presented the plan in a session of the Senate Standing Committee on Privatisation chaired by Mir Muhammad Yousaf Badini.
The secretary told the committee that two liquefied natural gas power plants would also be sold in the first phase of the privatisation plan. He added the government was aiming to complete the initial phase in a period of 12 to 18 months.
Sharing details of the second phase, Malik said 41 public-owned entities would be up for privatisation over a period of three to five years.
The secretary told the committee members that several small-scale state institutions had already been privatised and were now returning profits.
In October last year, the government decided to privatise only 11 entities – almost all profitable ones – and dropped all bleeding companies such as Pakistan International Airlines and Pakistan Steel Mills from its active list of privatisation.
The board had also recommended privatising four banking and insurance companies, three oil and gas sector companies, two LNG-fired recently constructed power plants, two hotels owned by PIA and one real estate sector transaction.
The board approved the strategic sale of the loss-making SME Bank Limited, the First Women Bank Limited, and the Pakistan Reinsurance Company Limited.
It also approved to divest the shares of the State Life Insurance Corporation on the stock exchange.
The board also approved three capital market transactions of the Oil and Gas Development Corporation Limited, the Pakistan Petroleum Limited and the Mari Petroleum Limited.
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