Deflecting blame for PSM failures

The Pakistan Steel Mills (PSM) is by now a famous metaphor for everything that is wrong with the state-owned industrial system in Pakistan. A company with enormous potential, which produces a good that is badly needed for the economy, is shackled by an incompetent management under the stewardship of the ministry of industries. It seems more than a little disingenuous, then, that officials from the industries ministry, far from acknowledging their failures, have chosen to blame Pakistan’s free trade agreement (FTA) with China for the PSM’s financial collapse. That this argument is without merit should be obvious to anyone after the most cursory review of the facts.

The Pakistan-China FTA was signed in 2007, but the PSM was the subject of many a corruption scandal long before then, having been rendered a financial basket case by a series of managements that were, at best, grossly incompetent and at worst criminally negligent and corrupt. It is true that steel from China is relatively cheap, but it is also clear that the real reason for the PSM’s bad performance is years of poor maintenance of its complex infrastructure that has resulted in the need for constant shutdowns to undertake repairs that have become necessary as a result of neglect. To blame the FTA with China is an attempt to deflect blame by officials who have been unable to keep their commitment to the cabinet to help the PSM reach financial breakeven by January 2015. The PSM is an essential component of Pakistan’s industrial landscape. Were it able to produce steel at full capacity, it would likely be relatively competitive even with the cheapest of Chinese imports. Access to cheap, readily available steel is essential for the industrialisation of any developing economy and Pakistan’s failure to develop its industrial base is in part due to expensive inputs like steel. We hope the cabinet does not fall for the bureaucratic game of deflecting blame. It should hold the civil service responsible for the failure to meet promises.

Published in The Express Tribune, March 31^st, 2015.

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