The massive corruption in Pakistan Steel which for quite sometime went un-checked had been the main cause of neglect of this plant. In 1996 a stage had reached when it was thought this huge complex would no more be viable. That was the time when its privatisation was aired.
Since it was a question of 22,000 employees therefore it was decided to tie up the loose ends. In October 1998 the then Prime Minister Mian Nawaz Sharif took a very bold step to appoint Lieutenant Colonel Muhammad Afzal Khan (late) as the new Managing Director of the Pakistan Steel.
Unfortunately a federal secretary who was holding an additional charge to look after as Chairman Pakistan Steel never allowed the Managing Director to perform his main role of running the operations and declared the MD as non-executive MD. It was very sad that the Prime Minister knowing this position did not intervene to establish the authority of the Managing Director to run the operations of the Steel Mill and it kept sinking.
It was good luck for the Pakistan Steel that President General Pervez Musharraf, who replaced Mian Nawaz Sharif, took a very wise decision when he appointed Colonel Afzal (late) as Chairman of Pakistan Steel relieving the federal secretary from the additional charge.
He was given three major tasks; (one) to bring an end to corruption and (secondly) to carry out re-structuring of the Steel Mill and convert it into a profitable outfit. It was very difficult and a big challenge. Through his untiring efforts and with the co-operation of the dedicated team he accomplished the task with remarkable results and that was hailed throughout the country.
He introduced voluntary retirement scheme and was able to reduce the strength over 6000 working force and paid around 48 crore rupees to the retiring personnel through own resources without seeking any financial help from the government.
Apart from this he repaid the old debts of the financial institutions that amounted to rupees 21 billion. During his 4-year tenure he brought financial and work discipline in Pakistan Steel that will be long remembered in the history of Pakistan. He was later planning to carry out expansion and go for major repairs but it was not destined that way and he left us for final abode. May God bless his soul. It was his hard work that put Pakistan Steel on its proper track and turned it into a profitable organisation.
His successor the new Chairman, Lieutenant General Abdul Qayum (Retd), deserves full credit for carrying the torch lit by his predecessor with the difference that the ex-Chairman was not in favour of privatisation.
The present Chairman of the Pakistan Steel in his recent statement has said that the government is determined to finalise the privatisation of Pakistan Steel by December 31, 2005, although he may be having his reservations on its privatisation but has to carry out the instructions of the government.
It is interesting to note that a huge plant like Pakistan Steel, which is 25-year-old, its immediate need is to carry out its complete overhaul and bring it to a state that it can increase its production capacity to 2 million tons but the solution has been sought in its privatisation.
There is every likely hood that we may not find a good buyer because at present it requires immediate major overhauling of coke oven batteries, hot strip mill, steel converters and unloaders. Thermal power plant which consists of three turbo generators of 55 mw each is fairly old, the first two were put into operation in 1981 and the third one in 1985 needs alternate arrangements.
The question arises who is going to bid for it when some of its units, which have become critical and are beyond local repair and need major overhaul?
Pakistan Steel, the single largest industrial complex in the country from the point of view of national economy in general and from the defence angle in particular had remained the focal point of all the planners, whether engaged in future economic development or strategic needs.
At the time of partition neither any steel works nor any defence-oriented industry existed in the areas falling within the geographical boundaries of Pakistan whereas India had full-fledged Steel Mills operating even before partition.
Having got it now we want to get rid of it like PTCL in a big hurry. It provides a sound base to the engineering goods, including downstream industries. It is a known fact that rapid industrial growth in Pakistan has been mainly due to Pakistan Steel. Before its establishment we used to import all our needs spending huge foreign exchange.
It has a production capacity of 1.1 million tonnes of steel annually which could have been expanded to over 2 million tonnes but the loot and plunder prevented its expansion. Since its coming into operation it has met demands from all sectors with high quality steel products. Therefore before it is put to sale the whole issue must be analysed critically.
The main purpose to establish Pakistan Steel Mill was to fortify our industrial foundation and achieve self-sufficiency in all types of steel products and it is a matter of great satisfaction that we achieved self-sufficiency in steel products that resulted in saving billions of rupees in foreign exchange.
What is the wisdom of its privatisation like PTCL which has started generating huge profit inspite of surplus manpower, remains a mystery.
Privatisation is a good venture but for those industries which are being mismanaged and running in to losses. The nation would certainly welcome such steps as for steady growth units must be running in profit. Like PTCL real estate, which was the main attraction for the buyers, this huge steel complex is also spread over an area of 18600 acres approximately 29 square miles.
It is a kingdom by itself and buyers have focused their eyes on the vacant land lying in the surrounding of Pakistan Steel complex. and not on the Steel Mill that needs immediate complete overhauling.
The total capital cost of the project was estimated to be Rs 24.750 million which ended up to 27 billion rupees. Interestingly the cost has been fully recovered and all loans paid.
During the last three years the sale saw an increase by 35 per cent, and the net sale proceeds during the year 2004-05 have been around 32 billion rupees and profit ratio in three years have been 559 percent. This year the profit is expected to be over Rs 6 billion. With the expansion of the Steel Mill the profit can be increased manifold. If that be the case should we go for privatisation?
It need hardly be mentioned that no country can be self-reliant in its defence without achieving self-sufficiency in indigenous production of military hardware, armaments and ammunition which in turn is impossible without developing its own steel technology and related engineering goods industry. The establishment of Pakistan Steel has filled the vacuum and now the basic raw material of all defence needs STEEL is available within the country for all of its defence applications.
Pakistan Steel has already given rise to a large number of downstream industries based on steel and it has opened new vistas for the rapid development of engineering goods industries having direct bearing on defence production. Before Pakistan Steel went into production, even defence-oriented heavy industries like Pakistan Machine Tool Factory, Karachi, Heavy Mechanical Complex, Taxila and Heavy Forge and Foundry, Taxila were dependant, for their main input, on the imported steel but we are no more dependent on steel imports any longer.
Now that we have sufficient quantity of mild steel available with us, it should no longer be difficult to attain complete self-sufficiency in our future requirements of alloy steel, which is needed for military equipment, armament, and ammunition.
The steel industry, being highly capital-intensive one, has certain special characteristics with regard to the investments. But in our case it has crossed gestation period and paid off the entire cost and now is the time to get proper return. With the present poor condition of the plant that is no more a secret it is giving over 90 percent production which can be increased with the passage of time if the problems are attended.
The problems with the developing countries, where huge investments are needed in projects of steel works, are so complicated that under-developed countries are advised by economists to forgo this option or postpone it in favour of less capital-intensive quick yield projects. Thanks to the vision of our government that in 1968 against all odds decided to establish steel mills in the public sector.
By handing over control of an institution which is spread throughout the country has taken away some of our pride at the cost of a few dollars that could have been raised within Pakistan without any difficulty.
Now we have to be extra careful while going for the privatisation of Pakistan Steel. What is privatisation? It means de-regulation, thereby implying taking away the control of the government and its authority.
The simple method is to hand over to the public sector instead of selling it to a foreigner. Who knows who is at the back of the front man? Can we stop the new owner from shutting down the plant on one pretext or the other or his refusal to supply material at a very critical time? Certainly not.
Pakistan Steel Mill is the backbone of Pakistan economy. Therefore it needs to remain in the hands of the government or the public sector, certainly not in the hands of a foreigner.
Even otherwise the Indian government's recent 10-year defence pact with USA on supply of arms and the massive arms build-up warrants extra care on our part to protect our interests. Dr Manmohan Singh, an experienced economic policy-maker than we have in our country, has given a policy statement " No profitable public sector enterprise will be privatised. If it is an IMF advice let us for the time being ignore it.