The PSM dole out
The debate surrounding ownership of mega corporations is probably as old as the corporation itself. The arguments for state ownership mainly factors in security of workers, stricter checks and cheaper finished goods for other state institutions, while those on the other end of the scale claim efficiency as the principal boon coming as a natural corollary to private enterprise. The advocates of state ownership are further divided over whether the government should bail out sinking enterprises and, if yes, how that should come about. Nowhere on the entire spectrum is, however, the position the Pakistani government has taken with regards to the Pakistan Steel Mills (PSM): inaction. The country’s giant of a steel manufacturing complex, just like the national flag carrier, PIA, is without a CEO since July this year when the last incumbent tendered his resignation after the government denied a bailout package. The various proposals which are being bandied about in the official circles indicate the government has yet to make up its mind about the future of the Steel Mills while it is devouring huge funds every month.
The maximum the government has done recently is to release three months of pending salaries of its more than 16,000 employees. A lack of resolve is further evident by a comparison of two different summaries initiated by the government which sought to liquidate, shut down, privatise or turn around the company. The summary clearly states corruption, inefficiency and the government’s lukewarm attitude as major reasons for the present state of the PSM. Despite having received a bailout package of Rs40.5bn in 2009, the company had suffered a cumulative loss of Rs86.3bn as of June 30 this year, with its liabilities having piled up to Rs98.6bn. Even the last resort of privatization is not going to be an easy ride any longer – costing the government quite a packet and more than a year for requisite arrangements. The situation continues as the company has suffered Rs7 billion losses since the present regime came into power.
After floating these various ideas, the high ups have advised to take borrowings from international sources. Further borrowing is out of question as even the National Bank of Pakistan had refused to provide more funds to the ailing enterprise. In this situation the government only seems to buy more time and funding sources until it appoints a new CEO to sort out the mess. Whatever panacea the government may have up its sleeve, one thing is clear: the PSM is bleeding the economy badly. What is even disheartening is that instead of coming up with a long-term, sustainable solution the government tried to buy time by releasing the arrears, implying doling out food bags to passengers on a sinking ship and telling them to wait until they have a captain. In a situation like this, the least that is expected is a change in the status-quo. The government needs to come up with more creative solutions to this and many other tough decisions staring it in the face.