The Economic Coordination Committee (ECC) has questioned the payment of salaries to Pakistan Steel Mills (PSM) employees and directed the Ministry of Industries and Production to present a plan for the steel mill's future revenue stream. The directive came during a recent ECC meeting, where the committee demanded details on the funding source for PSM salaries and a comprehensive outlook for the mill's revenue generation.
ECC Demands Salary Funding Details
During the meeting, the ECC raised concerns about how PSM staff salaries were being paid up to June 2026. The committee instructed the Ministry of Industries to provide a breakdown of the funds used to cover salary costs and the projected revenue flow. This information is to be submitted at the next ECC meeting.
Background of PSM's Financial Decline
The Ministry of Industries briefed the ECC on PSM's history, noting that the mill is fully owned by the government of Pakistan. Losses began in the 2008-09 fiscal year, leading to a complete production halt in 2015. Since 2013, the government has provided loans to pay net salaries. After operations ceased, PSM's financial condition worsened, leaving it without resources to pay staff.
To reduce salary expenses, PSM management retrenched 7,892 of the total 8,621 employees, retaining only 729 staff members primarily to safeguard properties for eventual disposal. This reduced the monthly salary bill from Rs360 million to approximately Rs40 million.
Cost-Cutting Measures and Savings
The ministry highlighted efforts to cut losses, including transferring the power distribution system for residential colonies to K-Electric and discontinuing water and gas supply to the downstream industrial estate and residential colonies. These measures are expected to yield annual savings of Rs6.9 billion.
Supreme Court Directive and Budget Allocation
The ministry also informed the committee that the Supreme Court of Pakistan, in human rights case No 16985-G of 2018 (communicated by the Accountant General Pakistan Revenues), mandated that all ministries ensure salary disbursement on the first day of each calendar month. PSM salaries must be paid until the Human Resource Retrenchment Plan is implemented. For the fiscal year 2025-26, the federal government approved a budgetary allocation of Rs3.5 billion for PSM.
Based on this, the ministry requested ECC authorization for the Finance Division to approve a projected net salary of Rs351.73 million for FY 2025-26, to be disbursed monthly from the allocated Rs3.5 billion. The Finance Division raised no objections to the proposal.
ECC Approval of Technical Supplementary Grant
The ECC considered the summary titled "Approval for Disbursement of Salary of PSM for Financial Year 2025-2026 (Projected)" and approved a technical supplementary grant of Rs351.73 million for June 2026. The committee reiterated its demand for a future revenue stream plan from the Ministry of Industries.
