According to a Business Recorder exclusive, the Cabinet Committee on Privatisation (CCoP) has decided to split Pakistan Steel Mills Corporation (PSMC) into two with the federal government keeping all land and excess liabilities while core land, estimated in thousands of acres, would be transferred to PSMC under a long-term rent agreement. This would be the scheme of things in case the Sindh government declines the offer of the federal government to take over the mills with all its assets and liabilities. The objective of this decision, one would assume, is to retain the entity's massive liabilities and allow the private sector party (whichever may eventually get the PSMC) to operate it with no past liability hampering operations; and hence with a higher probability of turning the financial fortunes of the Mills around making it an attractive investment prospect. This approach tacitly acknowledges the fact that steel manufacturing is a feeder industry and its contribution to the national economy merits support for its continued operations. In other words, the assumption is that in spite of the heavy haemorrhaging on the national treasury to keep the PSM afloat, its operations, if conducted on a profitable basis, have the capacity to benefit the economy greatly.
While there is nothing to stop the federal government from making the offer to the Sindh government, for which the provincial government's approval is not required, yet, what is baffling is that CCoP took this decision in spite of the accusations made periodically by senior PML-N leaders against the Pakistan People's Party (PPP) leadership. The allegations range from using the state-owned entities (SOEs) as recruitment centres for party loyalists, nepotism in senior appointments not based on experience or education, and lack of transparency to outright corruption. Furthermore, is there any evidence of the Sindh government's expertise in running industrial enterprises or their request that the ownership and management of the mills be transferred to them? Offering the Sindh government the right of first refusal is therefore untenable and reflects poorly on the PML (N) government.
PML-N supporters may argue that this offer is based on the acknowledgement that the PPP is sentimental about the fate of the PSM given that it was established during the tenure of Z A Bhutto. The PPP leadership has already stated that it would vigorously oppose any move to either privatise PSM or indeed to downsize it which would imply loss of jobs of many of its loyalists. Such sentiments, unfortunately, are not economically sound and the PPP leaders must acknowledge that by insisting that all existing employees are retained it is guilty of further haemorrhaging the treasury. This in turn would have obvious negative repercussions on all Pakistanis as bailout packages require the government of the day to raise taxes and reduce development expenditure to keep the budget deficit sustainable.
It may be recalled that the privatisation of PSM, approved by the then Industries Minister, Jehangir Tareen, during Musharraf's tenure, envisaged the sale of the mills with the core land, and earmarked the rest for the establishment of an industrial estate. The PSM sale was, however, stopped by the honourable Supreme Court.