A stillborn Pakistan Steel Mills

Pakistan Steel Mills can rightly be called a stillbirth; a wish that never was: a case of chasing shadows: and a dream turned nightmare; not because it was destiny but for other factors.

Too many misleading analyses have been written on the Steel Mill’s affairs. A detailed analysis of events leads to the inevitable conclusion that the governmental cases of privatisation since 1998, rejected by Supreme Court in 2006 and again reaffirmed by the apex court in May 2012 point differently.

No government since 2006 has shown the resolve to carry out in-depth investigations, ascertain how and why losses occurred, who is responsible for inefficiency and who should be made accountable. The Ministry of Law and Justice (MoJ) has not done its homework and the Ministry of Industries and Production (MoI&P) passed on unsubstantiated information to the ECC and Cabinet. Since 2009, it is this inefficiency that is accumulating losses and not the workmen. The case is not about disposing a dead carcass to the highest bidder, but catching the real culprits before the carcass is made alive.

With the world emerging from the ruins of WWII, steel was the buzzword and Pakistan was well on its way to industrialisation. The founding fathers decided to take the plunge. This was the most ambitious project of the country in the public sector, conceived in 1947, that never took off since the foundation stone in 1973 and inauguration in 1985. Intervening years are a sorry state of inefficiency, greed, the rise of cartels and cabals that frequent the corridors of power. By 2015, the commission mafia ensured it was dead. Thus, the dream of founding fathers was systematically and consciously destroyed.

Though the start-up of the mill was designed at 1.1 Million Tons per Year (MTPY), the foundation stone laid in 1973 by Zulfiqar Ali Bhutto, reflected the ultimate capacity of 2.2 MTPY. Technically, the mill is still incomplete and under construction.

The issue is not as simple as it looks in parliamentary debates, the gobbledegook of privatisation apologists and recommendations of the ECC. No government document can explain why this tragedy came to pass because the causes of failure were successively evaded. The truth lies hidden in the desires to keep Pakistan underdeveloped, the political economy of dependence, corporate capitalism, economic hitmen and now ‘The Age of Surveillance Capitalism’ that has moved beyond sovereignty of nation-states.

Shoshana Zuboff writes, “One vector belongs to the longer history of modernisation and centuries-long societal shift (nationalism) ... opposing vector belongs to the decades-long neo liberal economic paradigm… its aim to reverse, subdue, impede and even destroy the individual urge toward psychological self-determination and moral agency”.

Pakistan’s corporate mafia has grown with capacity to affect every strand of policymaking. The beneficiaries of 22 families have expanded into thousands and form the ‘corporate-political-bureaucratic elites’. At the backend they are supported by the transplanted culture of surveillance capitalism with experts backed by a bureaucracy that has been groomed as such. They will continue to parry facts.

If Pakistan Ordnance Factories, Heavy Industries Taxila, Aeronautical Complex Kamra and Strategic Plans Division with its nuclear industry, despite tight government controls, grow and flourish, what ails Pakistan Steel? For such elites, Pakistan Steel was always a hunting ground for the hyenas and jackals. They lack intent and desire to conceptualise in national interests. Throughout the planning and execution phase, the USA showed no interest in the project but their shadows like the IMF are keen to dispose of it.

1958 onwards, Prime Minister Huseyn Suhrawardy and President Ayub Khan pursued Soviet technical, scientific and monetary assistance. In 1971, after 20 years of development studies by PCSIR, Pakistan and USSR entered into a final agreement. Meanwhile a competitor from Germany offered to set up an alternate Steel Mill at Kalabagh. Volkswagen cars produced in Germany in the 60s were made from Kalabagh iron ore.

If Sweden could build thousands of kilometres worth of supply lines through rail and sea, what stopped Pakistan from developing an exclusive railway corridor from Kalabagh and Dalband Balochistan to Karachi? Importing ores are tagged by commissions, something that caused the final death.

It also depended on who led the team. It reached 95 percent installed capacity of 1.1 MTPY in 1992-93 when General Sabih was in charge and later in 1999, when Col Afzal converted it into a profitable project. By 2004, Rs 12 billion principal debt and a deficit of Rs 19 billion were paid back, besides covering Rs 9 billion losses. Yes, a colossal figure of Rs 40 billion in 5 years. Today no one wishes to make a case study of Afzal Miracle, who died in mysterious circumstances.

By 2006, Pakistan Steel Mills was moving towards new horizons. Russia agreed to boost the capacity to 1.5 MTPY. VATech of Russia agreed on a 9-year ROI partnership which was approved by the Central Development Working Party (CDWP) on February 1, 2005. This was an affront to the corporate mafia. Shaukat Aziz bypassed the approval and prequalified 16 companies for privatisation. The most favourable were a consortium of Arif Habib Group, Tuwairqi Steel and a Russian Magnitogorsk Steel Works (a front of Lakshimi Mittal). In March 2006, Mr Jehanghir Khan Tareenm through the privatisation commission, issued a Letter of Intent (LOI) to this consortium. The LOI is an oft-misused financial instrument in international markets to collect funds.

True to the shady LOI, on April 25 2006, PSMC, an offshore company surfaced in Mauritius controlled by Mittal of India. Barrister Zafarrullah Khan of the Watan Party submitted a PIL in Supreme Court on 9 May 2006. A stay order was granted and detailed judgement issued by a larger bench of the Supreme Court headed by Justice Iftikhar Chaudhary. The Letter of Acceptance (LoA) dated March 31, 2006 and the Share Purchase Agreement dated April 24, 2006 were declared ‘void and of no legal effect’. The government was ordered to carry out a Techno-Finance Audit of Steel Mill accounts. Most Supreme Court orders in the judgement have not yet been addressed by successive governments.

This historic judgement was the precursor of Gen Musharraf-Justice Iftikhar standoff. Though the revival of the Steel Mill is a preferred option, no privatisation can be carried out unless actions ordered by the apex court are implemented.

In 2009, the Supreme Court took up a suo moto on the Steel Mills that was also joined by Barrister Zafarullah of the Watan Party. The government of PPPP and the bureaucracy played delaying tactics and presented a conceited defence on management, losses, accounts and investigations by FIA. The apex court, repeating much of the 2006 judgement, showed a lack of confidence in audits and FIA and ordered NAB to assume the investigations. There has been no result so far.

Unfortunately, the incumbent government has done nothing to implement the orders of the Supreme Court issued in 2006 and 2012. It appears that while the privatisation apologists and MoI&P have habitually evaded questions of techno-financial forensic audits, fixed responsibility for losses and tried reviving the mill on the pattern of 1999-2006, they also managed to convince the cabinet by concealing facts. It also appears that the Law Ministry was not consulted in the ECC decision, else apex court orders would have been highlighted and become binding.

The Prime Minister should appoint a JIT to investigate a) Why Supreme Court Orders have been bypassed b) fix responsibility from 2006 onwards for losses, irregularities, financial frauds. Concurrently, a techno-forensic audit must proceed. In case this is not done, litigation in the Supreme Court will cause the government embarrassment.

If we take 2006 as the zenith of Pakistan Steel Mill, it was only 14 years ago that it was alive and kicking. The sudden death in 2015 is a manipulated dynamic. Revival of the Steel Mills and exploitation of iron ores from Kalabagh, Punjab and Dilband, Balochistan will signal a significant leap for Pakistan. Who are the people who want Pakistan to go backwards?

Samson Simon Sharaf
The writer is President of the Insaf Labour Wing and patron of the Insaf Jafakash Labour Federation.

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