A laborer descends a flight of stairs from an iron-making section at the Pakistan Steel Mills (PSM) on the outskirts of Karachi, Pakistan February 8, 2016. To match Insight story PAKISTAN-STEEL/PRIVATISATION REUTERS/Akhtar Soomro

ISLAMABAD: The Supreme Court on Thursday questioned the federal government’s initiative to revamp the ailing Pakistan Steel Mills (PSM) and warned the plan might lead to a disaster.

“Whatever the PSM management is planning will only create hurdles since it will burden the courts more as 5,000 cases will come to the courts and the management eventually has to reinstate majority of them (the employees),” said Chief Justice of Pakistan Gulzar Ahmed who had taken up a case relating to the PSM’s financial health.

“The PSM management has neither a proper plan or nor do they have any idea what they are up to,” the chief justice said while pointing towards the counsel for the PSM Nayyar Abbas Rizvi. The Supreme Court could not come to the support of the mills all the time, the chief justice said.

“Your plan is to terminate [the services of] 95 per cent of the employees and then appoint new employees on a contract basis,” said Justice Ijaz-ul-Ahsan, another member of the bench.

Court seeks comprehensive report on unit’s revival

He recalled that currently 320 cases were pending at different high courts while 29 were in the Supreme Court.

Mr Rizvi informed the court that Rs40 billion would be needed to run the PSM on a public-private partnership basis.

Additional Attorney General Chaudhry Amir Rehman said the cabinet had not decided to remove all the employees of the PSM.

The court however sought a comprehensive report on the revival of the steel mill and postponed further proceedings for a month.

Earlier on June 5, the PSM management had told the court that Rs40bn would be required to clear liabilities of its 7,884 — out of total 8,884 — employees.

Besides a total loss to the national exchequer on the balance sheet of the mills stood at around Rs230bn, he said, adding that a mill of this sort should not have more than 500 to 1,000 employees.

Moreover, about Rs92bn had been paid to the employees of since 2008, the PSM had stated in an earlier report.

The report however explained that the Board of Human Resource Committee of the PSM had approved a plan on April 15, to rationalise the Pakistan Steel’s workforce. The board had also requested the Ministry of Industries and Production to send a summary to the Economic Coordination Committee (ECC) on behalf of the federal government to make arrangements to pay the retirement and termination dues of its employees.

The debt of the employees’ liabilities, including provident fund, gratuity and leave encashment, amounts to approximately Rs20bn while the liabilities of retired employees amount to another Rs20bn.

Till date, the report explained, approximately Rs30bn from the date of closure of the steel mills had been paid to the employees for net salaries that excluded the benefits and retirement dues etc.

Presently the PSM is in a shutdown state bearing heavy losses which have resulted in accumulated liabilities thus causing huge deficit issues for both the government and the organization itself. The steel mills have been completely shut down since 2015 and at the time of shutdown the mills had approximately 15,000 employees