Rust in peace, PSM

The government has finally taken the crucial last step required to pronounce Pakistan Steel Mills (PSM) dead — cutting off its utilities. Although the mill has been closed since 2015, employee layoffs were much more gradual, and utility supplies were maintained to keep industrial equipment in working condition. The decision to discontinue gas supply means the government no longer believes the white elephant can be sold off as a going concern.

The move is unsurprising, considering that the mill had already been removed from the privatisation list due to lack of interest, and the federal and provincial governments have openly discussed alternative uses for the mill and other land owned by it. But even these discussions have not yielded a solid solution, and the government continued to lose billions in the meantime. The fact that SSGC recently warned it would disconnect the mill’s gas line was likely the straw that broke the camel’s back.

As things stand, the Sindh government plans to convert most of the land for general industrial use, including an export processing zone. Earlier proposals such as opening a new steel mill at the site, despite having strong support from certain quarters, were also deemed too risky to move forward.

Though PSM could still be stripped for parts and sold at a profit, due largely to its massive land holdings, such a move would be extremely cumbersome and would also entail a lot of due diligence because of the relatively high amount of foreign interest. Handing it over to the Sindh government to repurpose into economically productive land always made more sense, especially since the new occupants of the land could be convinced to take over the responsibility and cost of disposing of equipment, which would normally have been borne by the government.

And while opponents of the PPP and PML-N will try to paint the decisions in partisan colours, the fact is that every previous government’s turnaround plan for PSM was an unmitigated disaster. Closing the mill is simply an admission of failure, about 20 years and several billion dollars too late.