History: Pakistan Steel was profitable from 2000 till 2007, every single year. Accumulated profits over the period stood at Rs20 billion. Pakistan Steel lost money from 2008 till 2013, every single year. Accumulated losses over the period stood at Rs100 billion. Pakistan Steel lost money from 2013 till 2018, every single year. Accumulated losses over the period stood at Rs138 billion.
Total losses and liabilities: In excess of Rs476 billion. There have been no charges, no investigation, no accountability. Imagine: Rs476 billion means that each and every family in Pakistan has lost Rs15,000.
Breakdown of losses (submitted in the Supreme Court): Business losses, Rs4.68 billion in one year. Losses due to corruption, Rs9.99 billion in one year. Losses due to mismanagement, Rs11.84 billion in one year. Total losses, Rs26 billion (for the year 2008-2009). On August 18, 2009, ex-PM Gillani sacked Pak Steel Chairman on corruption charges (but no investigation was ever undertaken).
Alarm bell: Pakistan Steel is still losing money at the rate of Rs120 million a day every day of the past seven months. From August 2018 till March 2019, Pakistan Steel lost Rs25 billion.
Fact 1: Pakistan Steel was shut down in 2015. Fact 2: We are spending around $400 million a month every month on steel imports. Fact 3: The monthly salary bill is Rs380 million a month every month; production is nil.
Current progress: In October 2018, the Ministry of Industries and Production was given 45 days to present a revival plan (Adviser: Razak Dawood; the prime minister of Pakistan is the minister-in-charge). On November 16, 2018, the minister of finance told the media that “most of the work on the plan has been completed”. As of March 2019, a revival plan is yet to see the light of the day. From August 2018 till March 2019, Pakistan Steel lost an additional Rs25 billion.
I have counted seven meetings of the Economic Coordination Committee (ECC) between October 2018 and March 2019 in which Pakistan Steel was discussed. As of March 2019, a revival plan is yet to see the light of the day. From August 2018 till March 2019, Pakistan Steel lost an additional Rs25 billion.
Hurdles: There’s a massive conflict of interest. Revival of Pakistan Steel is not in the interest of private-sector major steel players.
Fact 4: The tariff structure in the steel industry is such that in the absence of Pakistan Steel major private sector players rake in billions every year.
Recommendations: One, follow the Public Sector Companies (Corporate Governance) Rules 2013. Two, professional CEOs. Three, professional CFOs. Four, professional directors. Five, professional general managers. Six, tariff rationalisation for a level playing field.
For the record: Credit goes to Dr Akram Sheikh for ‘manpower restructuring’ and ‘financial restructuring’. And, credit also goes to Lt-Gen (r) Sabih Qamar-us-Zaman for 95 percent production attainment (that’s all in the past).
Benefits to the government: One, additional tax collection running into billions (from tariff rationalisation). Two, up to $3 billion import substitution. Three, cheaper steel for Naya Pakistan’s 5 million housing project. Four, cheaper steel for dams. Five, economic security in the face of a hybrid assault.
The writer is a columnist based in Islamabad.
Email: farrukh15hotmail.com Twitter: saleemfarrukh