PSM questions

The question of what to do with the Pakistan Steel Mills is a question that has confused the last four governments. In the Musharraf era, the military government agreed to a controversial deal to privitize Pakistan Steel for just $362 million – which was swiftly put to rest by the Supreme Court of Pakistan. Now, one must wonder if the new proposal by Prime Minister Imran Khan to hand Pakistan Steel over to China will be able to avoid similar controversy. Handing over such a crucial asset of the state to another country is not a simple matter.

The Pakistan Steel Mills were once considered a crucial cog in Pakistan’s efforts to industrialize and there will certainly be those who will question the reasoning behind bringing Pakistan Steel down from its high pedestal to today, where it continues to make losses and has needed multiple bailouts from the government. What is clear, however, is that since the privatisation agenda rolled its way into Pakistan since the early 1980s, Pakistan Steel suffered from gross neglect. With government after government committed to finding a way to get rid of the giant industrial complex, the Rs10 billion a year losses of the 2000s are not hard to understand. The question of why the government cannot revive a huge industrial complex is hard to answer. It certainly seemed that former finance minister Asad Umar was hopeful that he could steer the Pakistan Steel Mills into a profit-making industry for the state before his unceremonious removal from his post. Now, Pakistan appears to be ready to hand over the steel mills to the Chinese government through a government-to-government deal. This is the policy that the government has come up with.

With another visit to China scheduled this week, it would appear the current government has limited options left over how to attract Chinese business into the country. There has been little word from China yet over how it is interpreting the shrinking of the Pakistani economy over the last one year. Will it take over Pakistan Steel? And will China put down money for flagship railway line and dam building projects? The more immediate questions over PSM will be what kind of deal is agreed with China (if this happens), what kind of public scrutiny it will face and whether the agreement will show any actual plan to revive the ailing state enterprise. These crucial questions should be at the heart of any plan to revive the Pakistan Steel Mills.