Pakistan Steel Mills (PSM) is one of the 134 public sector enterprises that cost the national exchequer billions of dollars every year. PSM debt/liabilities have soared above Rs.650 billion. Deeply entrenched status quo forces, various ministries – the Ministry of Industries and Production, Finance, FBR, the Privatization Commissions, private contractors and corrupt officials within Mills – continue to collude against privatization or revival of the mills which remains shut down since 2015 but is still incurring Rs.80 million every month for gas utilization, writes Imtiaz Gul.
Pakistan Steel Mills is both a goldmine as well as a festering wound. Its land assets (19,600 acres), the network of utility services and direct road/train access to Port Qasim make it a goldmine. But on the other hand, it symbolizes the plight of the profusely bleeding 134 public sector enterprises (PSE), which the Public Accounts Committee wants privatized. These PSEs gobble up nearly four billion dollars every year to stay afloat. They include several state-owned corporations such as PIA, PTV, PTV, PTDC, Railways, Pakistan Steel Mills
Those in the know of affairs of the PSM say even the PTI Government learnt no lesson and wasted more than Rs 250 b in nearly 41 months of its existence. They believe dis-interest in efficient running or privatization is primarily because of the public-private vested interest (the so-called permanent status quo). This status quo has remained unaccountable since 2006 to date.
According to the audit of accounts up to December 31, 2020, the overall PSM losses and liabilities stood at Rs 650 billion with Rs. 524 billion on the official record and Rs. 126 billion were off-balance sheet not reflected in books of accounts. It must be kept in mind that currently the losses and liabilities are expected to be much higher, as the accounts for January to December 2021 are still pending for audit.
Despite closure in 2015, the PSM gas bill is averaging 80 million a month. The cumulative bill that the Mills owes the Sui Southern Gas Company has crossed Rs.41 billion. The reason; a Coke Oven Batteries Plant (COBP) has been in the heating mode for the protection of two critical batteries. Ironically, a tender for critical repair of these batteries was floated on 30 June 2005. Its proposed budgetary cost was Rs 400 Million. But the PSM staff repaired one battery and as the work on the 2nd was in process the new chairman invited a fresh tender in 2007.
Lo and behold, the contract was awarded for a whopping $ 23 million to a Ukrainian Firm, for repairing the batteries.
The new tendering itself was nothing short of a big scam which was never investigated against top management who were neither experts nor possessed knowledge of the functions of an integrated steel plant. The only explanation for such dubious tendering is the enormous corruption within the PSM administrative structures in collusion with private contractors. Several questions surround the PSM, which is eating up billions every year despite closure for over six years. What are the hurdles in initiating an experts’ enquiry into factors leading to PSM cumulative losses to the tune of Rs 650)? They are all beneficiaries of discriminatory steel import tariffs & the closure of PSM since 2015, leaving the market open for the private sector. Why is the government not reconstituting BOD & appointing professional management for the PSM revival, something Imran Khan had committed before the 2018 elections?
Who is actually obstructing rehabilitation or the privatization of the PSM? Is it the Ministry of Industries and Production, Ministry of Finance, Federal Board of Revenue, and the Privatization Commissions under successive governments from 2005 to 2021, who in connivance with private contractors and corrupt officials been milking the mills? Unfortunately, even the current government – like its predecessors – has not able to do anything to contain, if not reverse losses of more than $ 12 billion (losses to PSM + loss of Revenue to FBR + additional import bill due to closure of PSM) accumulated in the last 16 years or so. All that the PSM requires for revival is a mere $ 300 million and $ 600 million to enhance its production capacity from 1.1 MTPY to 3 MTPY. This assessment came from a private consultant that the Privatization Commission had appointed in 2015. But the government then – as well as the current one – cold-shouldered the proposal.
The current Government’s revival of PSM through privatization has thrown up new challenges; its privatization is not yet approved by the Council of Common Interests. Legal petitions including that by M/s Arif Habib filed in 2006 against CP 9/2006 are still pending with the Supreme Court. Besides, another petition was filed in the Supreme Court by PSM/MOI&P for direction to Government for the appointment of CEO PSM to execute the retrenchment of employees ‘approved by BOD. This too is still pending for disposal which further proves that PSM is a fit case for investigation into corrupt practices that have eaten away billions of precious public funds – and also deprived the country of potential revenues had the Mills been running. Even the PTI Government seems to have compromised and maintained status quo in favour of people with questionable credibility. It has not reconstituted the Board of Directors (BOD), nor appointed professional Management..
Factors Leading to Losses are crying for investigation. Who will bell the cat?
