Pakistan Steel Mills: A Legacy of Decline
Pakistan Steel Mills (PSM), located in Karachi, was once a symbol of national industrial ambition. Established in the 1970s with Soviet technical assistance, it aimed to reduce dependence on imported steel. At its peak, it produced millions of tonnes annually and employed thousands. However, by 2015-2016, production halted due to unpaid utility bills, rising debts, and inefficiencies. Since then, the mill has remained non-operational.
Financial Losses Escalate to Hundreds of Billions
Financial losses have reached alarming levels. Accumulated losses crossed Rs 200 billion and continue to rise. Overall liabilities are now estimated at Rs 400-500 billion, including pension and debt obligations. Even after shutdown, non-operational costs like salaries and pensions persist. The government spends hundreds of millions monthly on salaries alone, straining public finances.
Human Impact: Thousands of Workers Affected
Thousands of employees and retirees depend on PSM for livelihood. Delays in pensions and gratuities have created financial insecurity. Any restructuring must balance economic efficiency with social protection for affected workers.
Causes of Collapse: Political Interference and Mismanagement
The collapse resulted from chronic political interference, overstaffing, outdated machinery, and financial mismanagement. These factors made operations unsustainable and accelerated the decline.
Economic Consequences: Rising Steel Imports
PSM's closure increased dependence on imported steel, causing significant foreign exchange outflows. It also reduced industrial employment and weakened the manufacturing ecosystem, especially in construction and engineering.
Revival Options: Privatisation or Restructuring
Experts propose full privatisation, public-private partnership, or partial liquidation for industrial zones. However, deep institutional reform is essential: reducing political interference, restructuring the workforce, settling pensions transparently, and conducting a technical audit. Without reform, investment alone won't yield sustainable results.
Conclusion: A Strategic Asset Requires Decisive Action
Pakistan Steel Mills exemplifies how a national asset can become a fiscal burden due to weak governance. Its future depends on policy choices that reduce the exchequer burden while using remaining assets productively. The writer is a retired government officer from the Press Information Department.
