PAKISTAN’S largest steel mill is once again gasping for air. Since Oct 9, the mill has been shut due to a leak in one of its two blast furnaces.

The management expects it to resume operations today. What it is no longer expecting, though, is a materialisation of its so-called restructuring plan against which it secured a government-funded bailout of Rs18.5bn in April.

The CEO, retired Maj Gen Zaheer Ahmed Khan, had made approval of the bailout a condition for assuming charge. The payroll was stuck for almost two months and raw material stocks had depleted completely.

The government agreed to release the bailout funds in tranches against a commitment by the new CEO that he would raise capacity utilisation to 77pc, just above the break-even point for the beleaguered mill, and lift it into profitability by January 2015.

As late as September, the CEO went on record to assure everybody that the plan was on track and that capacity utilisation would touch 50pc in a month.

Then came the blowout. Less than two weeks after this assurance, the only functioning blast furnace in the mill suffered a major leak and had to be shut down. A press release was issued, giving reasons. “Operation of blast furnace is quite complex,” it began, going on to tell us that the last time the furnace lining was repaired was in 1996, and that the life of that renovation was 20 years, meaning the furnace now needed to be relined all over again, otherwise it “may blow up during operation”.

Nothing to worry about though, we were reassured, since this was just “a routine process failure” and the management was taking care of it “with extraordinary skill and proficiency coupled with hard work”. When exactly did the CEO become aware of this problem? Was it before or after he formulated his ‘restructuring plan’ back in April against which Rs18.5bn were demanded from the government?

Meanwhile, the funds allocated for the so-called restructuring have all been digested in the bowels of the mill’s dysfunctional administration.

Raw material import consumed Rs9.5bn, and the rest were spent on salaries and retirement benefits for the 16,000 staff, as well as utility bills and “minor repairs and maintenance”.

Today, the mill management is asking for another Rs8.5bn to undertake another round of ‘restructuring’ — never mind the commitment to lift the enterprise to profitability levels by January 2015.

This sad story has been repeating itself since 2006, when the most viable privatisation of the enterprise was blocked by the Supreme Court on specious grounds.

The result is accumulated losses and liabilities totalling Rs258bn. There is little doubt the story will continue to repeat itself in the future if the current privatisation plan is not allowed to succeed.

Published in Dawn, October 29th , 2014