PRIVATISATION
The government has expressed its intensions to lease out the Pakistan Steels Mills (PSM), but this dream can be turned into reality only if it wins legal battle in the PanamaLeaks case.
In a candid talk with the Money Matters, the minister of state for privatisation Mohammad Zubair said the Privatisation Board planned to take up the PSM privatisation issue in its meeting later this week.
“We will take the original privatisation proposal as well as lease proposal to the board and seek its consent on these proposals,” he said. “This status quo has to be broken. It cannot continue forever.”
The minister earlier this month had told the Senate Standing Committee on Finance that in the absence of a buyer, the government planned to lease the PSM out and a proposal to lease it to a Chinese or an Iranian company was being drafted.
The International Monetary Fund was being said to have repeatedly expressed reservations over the slow pace of the PSM privatisation process, which has prompted the government to complete it by the middle of next year.
The PSM’s total losses have reached to 220 billion rupees and there was no hope for any improvement unless a drastic action was taken.
Successive governments have been injecting huge amounts of money into the literally dead organisation, but in return nothing has been achieved.
He took exception to the “sarcastic” statements of opposition leaders, particularly Pakistan Tehreek-e-Insaf leaders, suggesting that PSM should be sold to Sharif family, for it has long experience in steel production.
“There is no technical issue involved that is creating an obstacle in the revival of the Steel Mills. The main issue is financial, as it is bleeding profusely and earning nothing. It has serious financial problems,” the minister said.
“It is an enormous challenge, and we have to take it up ... we have to do it. We have no other option.”
He said two major objectives need to be achieved while dealing with the PSM.
The minister said the first and foremost aim should be to ensure restart of the industrial activity at the Steel Mills. And secondly, the government should ensure that serious haemorrhaging of the mills was stopped immediately.
He said if the Privatisation Board gave nod to our proposal of lease, then the matter would be immediately taken up with the Cabinet Committee on Privatisation for approval.
However, he cautioned that unrealistic expectations should not be raised with regard to the privatisation or leasing of the Pakistan Steel Mills.
Successive governments have tried to sell PSM but in vein.
In 2006, the Supreme Court led by then chief justice Iftikhar Chaudhry struck down the privatisation deal concluded by former military strongman Pervez Musharraf.
The Pakistan Peoples’ Party (PPP) government of Asif Ali Zardari did not make any effort to privatise state-owned public entities, but the privatisation of PSM, like other entities has been figuring high on the current government’s priority list from day one.
The due diligence and other privatisation formalities with regard to PSM were completed by October last year, and the matter was placed before the cabinet after getting a nod from the Privatisation Commission board.
The cabinet, however, decided that the PSM should first be offered to the Sindh government, and thus stopped the Privatisation Commission from proceeding with its plans.
Zubair said the Privatisation Commission decided to lease out the PSM after it got no response from the Sindh government over its proposal.
The government claimed that it had enhanced the capacity of the PSM by sixty percent through its over 18 billion rupees restructuring plan, but that effort received a major setback when Sui Southern Gas Company Limited disconnected gas supplies to the mills because of non-payment of arrears in bills.
The PSM owes 39 billion rupees to the gas utility in outstanding bills. Moreover, more than 14,000 employees of the PSM have not been paid their salaries for several months.
The Economic Coordination Committee earlier this month approved three months’ salary for the PSM employees.
Zubair said the government was very serious to resolve the PSM issue one way or the other before the end of its tenure but political stability was a must to translate these wishes into reality.
“If we win the PanamaLeaks case in the Supreme Court, I assure you that I will implore the prime minister to get it done during his current tenure. We will try to fast track it. We will get a big political credit and mileage if we do it in our tenure.”
However, he said the government does not want to do this transaction in a hurry to put a propaganda tool in the hands of the opposition.
“We don’t want them to have an opportunity to mislead the people that the Pakistan Steels was sold on a throw away price. We will take our time, but we will do our level best to do it on time, it all depends on the political situation of the country.”
Zubair pointed out that investors would not risk investing money where the political situation was very fluid.
“It is not an easy task. It is a huge challenge, and we are ready to take it.”
He said even if everything moved smoothly, it would take at least a year or so to complete the whole process “if we do it on a fast track basis”.
Observers, however, are sceptical that the government would be able to fulfil its objective to sell or lease out the PSM during its tenure.
Practically speaking, they said, the government was too occupied with the political issues like PanamaLeaks and DawnLeaks, and it could not take the risk of privatising PSM, as generally, privatisation was an unpopular process.
They pointed out the government’s attempt to privatise Pakistan International Airlines last year, when it had to face stiff resistance from the political opposition as well as trade unions.
Moreover, any effort to decide the fate of PSM without consulting its workers was very risky.
Therefore, they suggest, that the government, which was already mired in a series of political problems, should avoid any imprudent move.
The writer is a senior journalist based in Islamabad
