As time runs out for Pakistan to sell its stakes in about 40 state-run companies to meet conditions for a $6.6 billion loan package it received from the International Monetary Fund (IMF) in 2013, the Nawaz-led government is poised to go for the privatisation of its “worst nightmare” – the Pakistan Steel Mills.
“Finding a potential buyer for Pakistan Steel will be a nightmare because the company is a nightmare,” Privatisation Commission Chairman Mohammad Zubair said.
“I’ve always sold IBM products which is the easiest — you’re always going with the best products or services. Now you’re going with one of the worst,” Zubair, who is also a former IBM executive, added.
Investors see about two-thirds of the company’s 16,000 workers as unnecessary and most others as incompetent, Bloomberg News quoted the head of Pakistan’s privatisation programme’s as saying in an interview. “Losses are running at roughly $20 million a month after the firm stopped operation in June because it couldn’t pay its gas bill.”
The US-based media organisation maintains that progress is crucial for Prime Minister Nawaz Sharif to show the world that the country is changing as it seeks to attract foreign capital to its financial markets.
The losses began piling up after the 2008 financial crisis, Pakistan Steel spokesperson Syed Abdul Hafiz Shah said in response to a question regarding the “nightmare” comments made by the privatisation commission’s head.
“Production is zero and liabilities can’t be paid, so obviously it’s difficult to run,” Shah said. “It’s up to the government what it decides. We will have to follow it.”
Although the privatisation programme is behind its schedule and reportedly facing resistance among unions and opposition political parties, Zubair insists that the privatisation push is still on track, saying legal and political hurdles have delayed the timeline for asset sales only about three months.
“This is a very critical stage. This is just the stage where the next momentum will be seen by the people of Pakistan,” he said.
The three companies seen as benchmarks for success are the Pakistan Steel, Pakistan International Airlines (PIA) and Faisalabad Electricity Supply Company (Fesco). All have been earmarked for privatisation for more than two decades.
A presidential decree issued last week repealed the 1956 law setting up Pakistan Airlines, removing a hurdle to selling a 26 per cent stake in the national carrier, Zubair said, adding Fesco is profitable and will be the easiest of the three to sell despite having 9,000 outstanding legal cases and spotty financial documentation.
However, Pakistan Steel is more complicated. Established in 1973 to supply a nascent manufacturing sector, the company stopped operating in June after gas supplies were cut off due to mounting debts, according to Shah, the company’s spokesperson.
