Steel sector hit by PSM, KWSC dispute

Industrial units face issues in water supply, infrastructure, and security

KARACHI:

All companies within the Steel Mill Downstream Industrial Units at the Pakistan Steel Industrial Estate have been deprived of water for the past 19 days, starting from August 27. This situation stems from a dispute between two government departments: Pakistan Steel Mill (PSM) and the Karachi Water & Sewerage Corporation (KWSC). The industrialists in the affected area, already grappling with rundown infrastructure, a collapsed sewerage system, and poor law and order, are appealing to the government for urgent intervention.

They explained that water bills range from Rs50,000 to over Rs5 million per unit, depending on each company's consumption. The association representing these organisations consists of 19 direct member companies, with indirect ties to all industries in the area. Some of the country's largest and most technologically advanced manufacturing units, employing approximately 20,000-25,000 workers, are located here. It is also one of the highest tax-paying regions in Pakistan.

Initially, this land was allocated to the PSM by the Sindh government, and the PSM was responsible for administering the area and maintaining lease contracts. As per the agreements, the PSM is responsible for maintaining the infrastructure. All companies in the area have been paying millions of rupees annually to the PSM for these services. However, since the PSM became dysfunctional in 2015, no real maintenance work has been done. This has led to blocked drainage, broken roads, clogged water channels, and leaking pipes.

Technically, the industrial units still fall under the PSM's administration, as no government institution has officially taken over its responsibilities.

The automobile industry, considered the backbone of the economy, relies heavily on these industrial units. Various technologies, such as glassworking, machining, moulding, stamping, casting, forging, and plastics, are used to manufacture automobiles, making it a crucial part of Pakistan's integrated supply chain. Despite this, the PSM has failed to meet its contractual obligations for over a decade, even though it collects an estimated Rs100 million annually in ground rent and maintenance fees. Zain ul Abidin Shariq, Chairman of the Downstream Units & Industrial Park Owners Welfare Association, said, "Since August 27, we haven't received any water. The PSM handed over responsibility to the KWSC, but the KWSC refuses to take over until PSM clears outstanding dues, which amount to about Rs10 billion. This industrial estate, particularly the auto hub, is caught in the middle of this institutional dispute. Without third-party oversight, we may be without water for a long time. Water tankers are not a viable solution, as they are unreliable, the quality is inconsistent, and the costs are too high."

Shariq noted that some companies have tried boring wells, but the groundwater is too brackish for industrial use, and the factories lack the resources to install their own water treatment plants.

He reiterated that all companies in the area have been paying maintenance fees, ground rents, and water bills consistently for over a decade and will continue to do so, no matter which authority takes over.

Akbar Allana, Director of Alsons Group, highlighted that due to the deteriorating security situation in recent years, companies in the Downstream Units have had to strengthen internal security measures, and the association has hired private patrols to prevent unlawful activities. He added that there have been several muggings, and since the water supply shutdown, many water meters have been stolen from outside factories. "There are so many issues that need to be addressed, and the PSM authorities must take responsibility for them," Allana said.

Shehryar Qadir, Executive Director of Jin Kwang JAZ Private Limited, stated, "Pakistan Steel charges each unit annually for ground rent, maintenance, and water (based on consumption) and is contractually obligated to provide water, firefighting services, road and street maintenance, refuse collection, and drainage, as well as other necessary services to maintain the estate."