The previous government’s tendencies to allocate revival of State-owned functionaries to Chinese consortiums appear to have passed down to this current government as well. The Pakistan Steel Mills(PSM) Board is in the books to suggest to the federal government to hand over the steel mill to a Chinese consortium on built operate transfer (BOT) basis for 30 years. A Chinese consortium consisting of Chinese Metallurgical Corporation of China Ltd (MCC) and Donghua Iron and Steel Group is interested in taking over PSM on BOT basis.

A BOT basis seems to be the only financially viable way to go about to transfer and revive the Steel Mill Industry. A built operate transfer approach is a form of project financing, wherein a private entity receives a concession from the private or public sector to finance, design, construct, own, and operate a facility stated in the concession contract. Other forms of reviving the PSM involved either privatising the Steel Mills- which was a risk too large to take and could result in further unemployment, or taking a commercial loan for its revival, which would not be feasible for the economy, considering our increasing debt. A public private ownership seems to be the way to go, and will benefit both the government and the Chinese consortium.

The government is in its rights to transfer the PSM to the Chinese consortium, and indeed it should if it feels this will bring about the best most efficient results. However, before making any such contract, the government should be careful to set terms and conditions to protect our local workers and economy. Greater economic cooperation with China can be a game-changer for Pakistan and CPEC is popular among the Pakistani public- yet with increasing tax exemptions for Chinese companies and dealings being in yuan, there is a fear among Pakistani workers of the local economy suffering in competition. More investment does not always mean more employment- sometimes with foreign companies; foreign workers get the share of employment, with local workers getting left behind.

With this contract, it appears that the Pakistani government is doing due diligence to ensure protection of Pakistani workers. Sources indicate that the Chinese consortium has informed that they will not fire the current employees of the PSM. According to the source, the Chinese have a plan for the expansion of the PSM, after which, the number of PSM employees will increase from the current 10000 to 25000. If the proper safeguards are in place, then this contract appears to be a much thoughtful and comprehensive than most.