ISLAMABAD: The management of Pakistan Steel Mills (PSM) has warned the government that a crisis is brewing at the country`s largest industrial unit due to the non-payment of wages and non-availability of medical facilities for staff and pensioners for several months, which could turn into a law and order problem.

The warning comes at a time when the mills is no longer considered `a going concern` by auditors meaning it cannot be considered a viable entity and is close to being classified as a `dead asset` minimising the chances of its fruitful privatisation.

At least $5 billion was spent over the past three years on `replacement imports`, to make up for the PSM`s `low-to-zero production`.

In a note to Finance Minister Ishaq Dar, PSM chief executive officer and federal secretary for industries Khizar Hayat Gondalhas said that the workers associated with a political party that is seeking the prime minister`s resignation have allegedly been involved in protests and violence inside the mills in recent days.

Mr Gondal warned that if timely measures were not taken, other restive employees could join the protest, which had been averted `for the time being` through the involvement of police, the Karachi commissioner and the Sindh chief secretary.

According to him, the workers were given certain commitments regarding their main demand for timely payment of monthly salary and other service benefits to serving and former employees.

Mr Gondal said the PSM executive committee had agreed to immediately release a total of Rs183 million on account of medical bills, extreme hardship allowance for heirs of deceased employees as well as leave-related allowances, to ensure that the protest did not spiral out of control.

On top of this, obligatory payments to `avoid disruption of electricity, water and domestic gas` would be made on due date to avert `a humanitarian [crisis]`.

`We are [worse-off] than FY2000, when [then] finance minister Shaukat Aziz is reported to have sug-gested to then chief executive General Pervez Musharraf to get rid of the PSM, even if it was possible at the notional price of Re1, a senior official told Dawn, adding that privatising the mills now would require a huge financial injection.

The PSM has already leasedoutabout157acresof prime land to the Port Qasim Authority for Rs1.467bn on a 30-year extendable lease to ensure emergency payments on account of unpaid utility bills. This is evident from an auditor`s report, sent to the Privatisation Commission a few weeks ago, which called upon the government to `ultimately resolve the issue of going concern` to complete a two-year audit of the PSM, without which, privatisation and due diligence will beaffected.

This necessitates the commitment that until privatisation, the federal government will pay net cash salaries to the PSM employees and that `[government of Pakistan] has neither the intention nor necessity [to] materially curtail its area of operation and has no intention to liquidate PSM`.

On the other hand, PSM`s Peoples Workers Union which is the mills` current collective bargaining agent (CBA) has reported to the government that losses and liabilities of the mills have crossed the Rs400bn mark on Aug 31, 2016, as compared to Rs10.4bn accumulated profit on June 30, 2008.

In a letter to the federal government, the CBA union recalled that the losses and liabilities doubled from Rs200bn in June 2013 to Rs400bn now mainly due to the indifference of theboard of directors, federal ministries and other stakeholders.

`This unfortunate situation leaves us no path open but that of public protest, the Peoples Union CBA wrote to various ministries and the board of directors. It deplored that although the government had given commitments to international lenders to appoint a professional board of directors, the PSM was still led by anad hoc leadership.

The union has claimed that the mills could still be revived, provided it was given to a professional board of directors, chief executive and a chief financial officer from the finance ministry with the required funds.

This would protect the country from foreign exchange loss in the shape of imported iron and steel items and support the balance of payments, it added.