The recent approval by the Economic Coordination Com­mittee (ECC) to disburse a six-month salary for Pakistan Steel Mills (PSM) employees in the fiscal year 2023-2024, while on the surface appearing to be a positive move, raises im­portant questions about the future of PSM. 

PSM has been non-operational since 2015, and during this peri­od, the national exchequer has continued to bear a hefty month­ly expense of over Rs.100 million. This decision has left the em­ployees hanging with the hope that PSM, a loss-making entity with accumulated losses exceeding Rs.206 billion, will experi­ence a turnaround. However, the reality is that meaningful prog­ress towards revival has been minimal, and there seems to be a lack of potential investors, except for a single Chinese company. 

Privatisation should be considered a viable option for PSM. As it stands, there is little progress in attracting investors or reviv­ing operations. If an outright sell-off is not feasible, alternative options such as private capital infusion, private operations, or seeking technical expertise should be explored. At the very least, a stage-wise plan for PSM’s revival is imperative. 

The prolonged financial burden on the national exchequer, de­spite the facility’s closure for almost a decade, demands a thor­ough review. It is crucial to make decisions based on merit rather than safeguarding political and vested interests. The govern­ment’s approach should be pragmatic, and it should prioritise the efficient utilisation of public funds. 

Additionally, the ECC’s decision regarding the transition from London Interbank Offered Rates (LIBOR) to Secured Over­night Financing Rates (SOFR) warrants careful consideration. The change in benchmarks requires a cost-benefit analysis, es­pecially concerning foreign loans and contracts. While LIBOR was forward-looking, SOFR is based on actual rates. The tran­sition must account for compensation in past contracts signed under LIBOR. The international association has suggested compensation rates for different timeframes, and these need to be meticulously assessed and finalised.