There is no bailout coming for the graveyard of a once-mighty industry.
The foundation stone of the Karachi Steel Mills complex—comprising 20 factories—was laid by prime minister Zulfikar Ali Bhutto in 1973. In 2015, it shut down after it couldn’t pay salaries to its generously inducted employees in addition to owing Rs. 66 billion to National Bank of Pakistan and another Rs. 40 billion to Sui Northern Gas. Its total liabilities today stand at Rs. 400 billion. Its 19,000 acres are a kind of graveyard of the state’s efforts to run an important industry with bureaucrats.
Set up with the help of the Soviet Union, which had earlier supplied the same technical assistance to India, the complex ran into trouble shortly after being operationalized. Instead of privatizing it to recoup some of the costs, the government decided it should turn it around by pumping more money into it. That it succeeded in turning it around for a time was the next misfortune. More graft was gouged to make it a basket case.
In 2005, the Mills in fact earned a profit of Rs. 5 billion! But the mirage of turnaround was soon gone as the losses returned with a vengeance. Finally, privatization was allowed by the Musharraf government and the Mills were awarded to a party along with liabilities. Then what happened was the tic of political nostalgia for socialism. A “people’s” party from the Mills went to the Supreme Court asking it to halt the sale. The Chaudhry Court, bent upon revenge against the Musharraf government, canceled the sale.
Today, its 9,000 workers can’t be paid their salaries because the Mills owe the aforementioned Rs. 400 billion and are in need of a bailout the present government can’t shell out. The money has gone into the pockets of the politicians who ran the mills through obliging bureaucrats. Given the global economic downturn, there are no longer any buyers on the horizon today. At least not any that would accept the colossal liabilities the Mills have accumulated.