THIS refers to your editorial ‘Sacked workers’ (Nov 29) referring to the retrenchment of the employees of Pakistan Steel and suggesting that the government should continue providing funds to maintain its workforce and also restart the production of steel. It compares the decision to retrench employees with the recent government programmes of providing soft loans to the private sector to sustain their economic activities during the pandemic.
Some material facts have been ignored in the said editorial. Pakistan Steel has been receiving generous support from the taxpayers over the years. Since production ceased in June 2015, successive governments have injected close to Rs55 billion to maintain the jobs of its workforce. During the last few months, the government cleared the outstanding dues of the retired employees who were not paid since 2012, and also found the money to pay the existing workforce their end-of-service dues amounting to Rs2.3 million per person on average. This is equivalent to almost two years of their salaries paid upfront. Total bailouts and loans given to Pakistan Steel by the different governments have amounted to almost Rs130bn during the last 20 years.
Furthermore, Pakistan Steel has also received support from other public-sector entities that include banks and utilities with total debt adding up to over Rs220bn. This difficult but necessary step of retrenchment will free up scarce public resources from a non-operational activity to other pressing projects that need funding.
Reviving and expanding Pakistan Steel so that it becomes a viable enterprise will require somewhere between US$1-1.5bn, expert technical know-how and a skilled management and operations team. Previous bailouts and cash injections have not delivered the desired outcome and given the size of the investment needed now, it is time to explore other options. Hence, the government is pursuing the only viable alternative – private-sector investment and operations.
Ministry of Industries
Published in Dawn, November 30th, 2020