WHENEVER retold, the story of the Pakistan Steel Mills always comes back with a new twist. The decision of three out of four Chinese firms to exit the race for the acquisition of the mill has completely altered its old storyline built around privatisation during the last couple of decades. With hopes for PSM’s sale fading since no investor is interested in acquiring it, as revealed by officials during a hearing of a Senate parliamentary panel last week, the caretaker government seems to have given up on its privatisation plan and decided to leave it to the industries ministry to ‘revive’ it. How the ministry will resurrect the scrap of a steel mill is anyone’s guess. The whole idea of reviving the PSM is a non-starter. Its production operations were shut down in June 2015 after the idea of its revival was found to be unfeasible and unviable. Yet the defunct steel company, which is accruing a loss of Rs30bn a year, and has reportedly accumulated financial losses of over Rs206bn, continues to bleed profusely.

This is not the first time privatisation plans for this loss-making public entity have hit a snag. The Supreme Court’s ruling in 2006, scrapping its sale to a Russian investor, was the final nail in the coffin. It has been a steep downhill journey ever since for the country’s largest steelmaker. The Chinese investors are said to have withdrawn their interest due to the global decline in steel demand and poor economic conditions. But that is not the only reason. No foreign investor would want to invest in Pakistan under the present uncertain economic circumstances when the government is doing everything it can to avert default amid drying capital inflows. To sell a public entity is undoubtedly a Herculean task in the given economic situation. It requires the government to stay focused and steadfast, keeping its eye on the ball rather than wavering. In the case of most public businesses, the government has no option but to dispose of them as early as possible to stop further financial losses. Postponing difficult decisions such as the privatisation of loss-making state businesses has already brought the government’s budget under enormous pressure, leaving little in the national kitty to spend on education, healthcare and other public services. We cannot afford this situation any longer.

Published in Dawn, October 31st, 2023