Stealing the Steel Mills

The annual Economic Survey was presented after my writing deadline yesterday and the Budget for the next year is being presented today. A Godsend, this mismatch of timing saved me the embarrassment of taking note of the two hugely irrelevant events. Unguided, the economy is running itself, with its nose down. Guided as usual by the IMF, the Budget is likely to be a macroeconomic sermon on fiscal and monetary restraint, without laying down the microeconomic foundations to protect life and livelihoods. One anti-deficit prescription, already cleared by the Economic Coordination Committee (ECC), some call it the Exemption Committee of the Cabinet, and ratified by the Cabinet, is the masterstroke played on the Pakistan Steel Mills (PSM). The Cabinet noted “that the entire burden of a dysfunctional institution has been borne by people for years, so there is a need to further the reform agenda in the national interest.” No one in the Cabinet, dominated by the unelectable, remembered that the decision flew straight in the face of the PTI manifesto. Nor did anyone express remorse on the fact that PSM was being killed for the very reason it was established — in national interest to secure economic sovereignty.

Asad Umar was committed to put the PSM back to work. After his ouster from the Ministry of Finance, it was placed on the active list of privatisation by the Cabinet Committee on Privatisation on June 17 last year. However, as late as April this year, the Minister for Privatisation was talking about the revival of the PSM as one of his most important objectives. So where and how did the radical departure come about and the extreme and the unusual first step of golden handshaking nearly all the employees was announced by the ECC and approved by the Cabinet in rapid succession, despite the claim by some responsible officials that the Cabinet will not ratify the ECC decision? It undermines the credibility of the government and the State Bank: they cannot ask the private sector to save jobs while they shed their own. The mindset blaming all our ills on the fiscal deficit seems to have prevailed. With the IMF millstone around the neck, Covid-19 decelerating taxable economic activity, untouchable expenditure rigidities, the coming Budget may well project an unusual jump in nontax revenue. Privatisation is a major source here, as it earns money in sale and saves on subsidies. But it is as wishful as the expectations of revival of investment during the pandemic. Why then?

The only logical explanation is the construction package that sneaked in to take advantage of the permissive circumstance of the corona pandemic. Ever since the inclusion of the PSM in the privatisation list, all eyes have been set on its enormously lucrative land. While demanding a meeting of the Council of Common Interests (CCI), a provincial government has sought the handover of the PSM with the promise to work the unworkable. The ultimate objective of a government not known for good management is the real estate. As for the CCI nod, the second PML-N government had secured it for the privatisation of state-owned enterprises in Part II of the Federal Legislative List. The bulk of the spurious recruitment in the PSM was done by an allied party of the government. Its lukewarm condemnation cannot but reflect a promised piece of cake. As nothing in the name of post-privatisation monitoring of agreements exists, anything is possible. Little wonder, then, that Javedan Cement, sold at a throw away price in 2006 for revival and installation of a power plant, ended up a housing society.