As the deadline to privatise both PIA and Pakistan Steel Mills (PSM) looms ever closer, the government must make up its mind on what to do with PSM before it has to wrap up its sale in June. The PSM management wants another bailout and the restoration of gas supply from the Prime Minister to keep operations running till the sale. Just how the government can manage to restore gas supply to PSM when it is Rs 35 million in debt to SUI Southern alone, is anyone’s guess. It will be interesting to see how the government manages to sell this behemoth amidst all the problems.

The government agreed to privatise loss incurring national companies including PIA and PSM when IMF granted a $ 6.7 billion tranche in 2013.

Ever since, the government has been putting this off, making one excuse after another. It has now been seven years since PSM started incurring losses. While PPP and other opposition parties think of the PSM as a national asset, it is clearly anything but. With over 15000 employees with a total salary of roughly Rs 380 million per month, it is hard to see why the Sindh government expressed interest in buying the mills. While the net worth of PSM’s assets is roughly Rs 192 billion, the liabilities of Rs 365 billion will have to be paid off before the mills can be profitable again.

PSM primarily produces Hot-rolled Coils (HRC), which are imported in vast quantities from China. China over-produces this commodity and can hence lower prices down to levels that PSM will not be able to compete with, even with the 15% import duty imposed by the government on steel products. PSM’s forges have been cold since June last year. Even if the government manages to sell the mills by June this year, that will be one entire year of zero production. More bailouts cannot be handed out, but at the same time, the blame game needs to stop. It is time for PSM to be sold, and not to the Sindh government. Private investors, looking to replace the management and cut unnecessary staff from the payrolls is the only way Pakistan Steel Mills will ever be functional again.