The Revival of Pakistan Steel Mills

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Meher Azeem Hakro
The ECC approved the dismissal of 9,350 Pakistan Steel Mills employees. The ECC also approved billions
of packages for laying off Pakistan Steel Mills employees, under which Rs 2.3 million would be given to
retiring employees in the form of a golden handshake while 250 employees would continue to work for
three months to implement the project. PSM was founded by Zulfiqar Ali Bhutto on December 30, 1973
built with the contributions of the Soviet Union. However, the completion of the PSM was formally
launched by General Zia-Ul-Haq then President of Pakistan on the 15 th of January 1985. The Manpower
has remained around 14,000-15000 personnel including technical and non technical. According to the
official website of PSM, its production was 1.1 million tons, expandable to 3.0 million tons per year. PSM
has also specialization in the production of flat steel products including, billets, slabs, hot rolled coils,
cold rolled coils, galvanized sheets/coils/formed sections and corrugated sheets supplying of high quality
and cost effective steel products to the domestic market. The production declined between 2008 and
2015 before it was completely shut down when it failed to pay Rs.20 billion in gas bills. The government
has been paying salaries to the employees continuously for five and a half years. PSM now owes Rs 211
billion with loss of Rs.176 billion. The government is of the view that the PSM will be run in private
partnership and this will help in reviving the PSM. The government thinks that after the restructuring of
PSM debt, the government will move towards privatization, which will make it a profitable enterprise.
However, only the core operations of the PSM will be privatized while its land will still remain in the
possession of the PSM. PSM employees suffered more from the closure of steel mills and their
condition reached starvation. Many employees preferred retirement but had to face difficulties in
receiving retirement benefits. Although many employees have died without receiving retirement
benefits, the government is still unwilling to pay retirement benefits to their heirs. If PSM is not
manufacturing any product, it is not possible for the government to continue to pay salaries only the
employees. PSM is now unable to deliver full production at this stage. The government has now limited
options to restore it. If the government tries to run it under its auspices, it will be of no use as the
government does not have skilled officers or expertise to restore it like before. There are many reasons
for the ruin of PSM but some of the following which caused this institution to collapse. The PSM plant is
based on Russian technology which is strong, durable but inefficient. Nowadays in the world American,
European or Japanese technology is being used. Even Russian spare parts are hard to find anywhere. The
electrical and mechanical systems of the PSM plant are largely obsolete and its energy consumption is
extremely high and inefficient. In PSM, energy is the biggest cost because using these plants saves less
and increases costs. Initially PSM had excellent training management institute but over time the interest
in enhancing employees training and capacity building decreased. A major factor that severely affected
the production and efficiency of PSM wasrecruitment on political basis and overstaffing. The process of
steel mill plants over the globe is now fully automated and highly skilled and IT-based manpower,
whereas we used to work on the old system while the other world has shifted to modern technology.
Union worker’s interference in administration of PSM also affected the performance and production. ?
The global steel market has now become very competitive; in this regard no concrete steps were taken

to make it competitive. This sinking Titanic can be saved if the government considers the following
policies and strategies: The government should put revival plan before the nation. The organizational
and governance model of PSM should be restructured with the participation of public-private
partnership.