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Tuesday Feb 18, 2020, Jumada-al-thani 23, 1441 Hijri

Aftermath of PSM privatization

27 June, 2006

By Ali Ashraf Khan

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Nobody can deny that economic independence can only ensure political independence in a world order where might has been established as right. Beggars can't be the choosers. It was in 1995-96 when the World Trade Ordinance had replaced General Agreement on Trade and Tariff that Pakistan should have looked into new markets to re-align its future economic strategy. Key to economic success is in increasing an integrated and competitive global economy, is in realization of potential skill and capabilities of human resources. Much trumpeted economic growth per se does not have meaning or purpose, if it is not aimed at betterment of the living conditions of poverty stricken people in the country, whose number is increasing inspite of tall claims of the government to have arrested this menace.

Our memory is not that short as not to remember Dr. Mehboobul Haq, whose greatest disservice was to politicize the Economic and Industrial progress in Ayub Khan's golden era by alleging that national wealth in Pakistan has got stuck up with 22 families only, he was the principal economist in Ayub days but later was removed with the departure of Harvard Group from the Planning Commission of Pakistan. Again in Ziaul Haq era he succeeded in re-entering the corridors of power, when he announced that national exchequer is empty, but what he and his successors in government have done to fill the coffers of the state, has not come to light and will perhaps not come to light inspite of Suo Motto action by the Apex Court of Pakistan on the questionable privatization of Pakistan Steel Mills etc. Lack of Transparency and Freedom of Information has led to the present game of loot and plunder and since then this musical chair is on and has become a fashion to blame others to make hey while the sun shines on them.

Privatization is the opposite of Nationalization, the first nationalization of assets was done in 60's by General Newin, the Iron man in Burma, to give his country a socialist look, but within ten years he realized that nationalization has given wrong signals to progress in his country, so he decided to undo it. In 1940 UK had nationalized some vital sectors of industry but in 1980 Margaret Thatcher started privatization of shares to public of British gas, British airways, British Telecom etc., Critics of privatization who oppose this sat it creates Monopoly in the hands of profiteers, which can lead to the loss of valuables, such as uneconomical essential services. They further say that privatization should be conditional to share the profits of these national assets by the state to beused for the benefit of its citizen, instead of being distributed among relatively small number of investors. That is why some people think nationalization in Pakistan has played negative role while the ruthless privatization and transfer of management leading to a free for all by investors has broken the back of the nation and the country.

Now when the Apex Court has taken Suo Motto notice of alleged shady sale of Pakistan Steel Mills by the Privatization Commission. It is very painful for me to see half a dozen former Ministers of Law arguing to assert before the Apex Court in support of flagrant violation of laws of the land and Rules of Business governing the financial discipline and code of conduct. The activities of Privatization Commission, which has got a wide scope of corruption, which could make its bosses rich and bring ruin to the country as a whole. The privatization policy, which was approved in 1991, had two main objectives before it:

1.      Reducing of financial deficit.

2.      Generation of resources for reducing the loan liability.

It is painful on this account that Privatization Commission has not only failed to achieve these goals for which it was created but has pauperized the nation and the country through loot sale of country's national silver and this game of pauperization is going on with impunity and there is no body to raise a voice against this malady. It does not require a wiz kid to come from another universe and expose the corruption involved in shady deal of sale of our national assets over a laugh including the Pakistan Steel Mills. Lack of sincerity and transparency in governance has added fuel to fire. Just as Justice is not only to be done but it should seem to be done. United Bank, Habib Bank, KESC, PTCL, Kot Adu Power Station, Fertilizer Plants and many other assets have been doled out to their favourites in the past, the result of KESC privatization is that people of Karachi are now paying through their nose in the scorching weather of June and future of this city seem more dark due to its un-imaginative privatization, and now the Privatization Commission has sold Pakistan Steel Mill, which had declared handsome profit in its last years annual report to a 3-Member consortium, which has sparked an un-ending debate on the role of Privatization Commission, which in my view has not only failed to act as custodians of national interest but has also failed to block occurrence of such grave irregularities, which calls for registration of criminal cases against the delinquents as provided under the law.

The grave irregularities committed in the privatization of Pakistan Steel Mills is that when the Cabinet approved the proposal for sale of Steel Mill. Privatization Commission invited through public notice expression of interest for pre-qualification and then as a result of this exercise six companies or individuals were declared pre-qualified to compete and offer their separate bids for purchase of Steel Mill. Thereafter these six companies or individuals were allowed to form two groups to make a pool to sabotage open and fair bidding competition among the original competitors, which should have been discouraged from day one and call for fresh pre-qualification if need be, which is the normal practice. How and why one bid was accepted and other rejected in haste and letter of acceptance issued without the approval of Cabinet Committee on Privatization (CCOP) by the Federal Minister for Privatization, who had assumed this portfolio only a day earlier. Why and How the Media and the government machinery continued to project and promote Mr. Hafeez Shaikh as Federal Minister for Privatization till that day, while legally he had ceased to be a Minister the day election results against his Senate seat was announced by the Election Commission many weeks before that event, which means that the Ex-Senator had no lawful authority to deal with the cases of Ministry of Privatization beyond that time.

Moreover when a three member consortium comprising of M/S. Saud Al-Tawariqi Group, Russian Magnitogorsk and Arif Habib Securities were given the letter of acceptance to sign the agreement with Privatization Commission, then how come the Privatization Commission has received initial payment from a recently established company in Mauritius, the PSMC SPV with a paid up capital of a few dollars only. The company, which is stated to be a joint venture of ATG Holdings and MML Holdings. The PSMC SPV is yet  nother addition without pre-qualification as the fourth company included into an un-ethical sale of Steel Mill, which has now been accepted as a fourth buyer in the Agreement for Sale by the Privatization Commission. How this was allowed to be done is a million dollar question, which needs to be answered by the government for the satisfaction of general public.

While the debate is on as to how a newly established company in Mauritius has been included as the fourth member of the consortium? I recall havinghave seen on BBC a programme in which popularly known Raja of Steel Mr. Mittal of India, which is worlds largest and most global steel producing group, they own steel mills in 16 countries around 4 continents and employ 224,000 people from 49 nationalities. Mittal Steel encourages modern steel manufacturing by combining it with both integrated and mini-mill facilities producing much of the Iron Ore and Coking Coal used in furnaces, and this group has been recently in news when European Union tried to block their bid to purchase another steel mill in Europe. Mr. Mittal, when asked if he would be interested in buying Pakistan Steel Mills, which is soon coming up for sale, this brought light into his eye's, and he said certainly yes, but his Indian nationality might come in his way, otherwise according to Mr. Mittal, Pakistan Steel Mill is the ideal steel producing unit because of its prime location on Indian Ocean with its own berthing facilities, which makes it unique, otherwise you incur time and money on transportation of raw material from port to your mill and same way add cost and time in transportation of your product for export shipment from the nearby port, while in Pakistan Steel Mills you save time and money on arrival of raw material from abroad, and then you negotiate your export documents immediately after packing and loading the goods in your own premises, which are dispatched to buyers in shortest time. He further went on to say that if he would get this unit he would immediately increase its capacity to atleast 8 times. One can only wonder as to how and why such a unique Industrial facility has been declared a white elephant and a heavy financial liability and offered for sale and that too through a shady transaction. Mr. Mettle's Indian nationality and Mauritius a Hindu dominated country leads us to keep guessing and hoping against hope that some day some time will we be sincere to our nation and the country to develop our own infra structure for the progress and prosperity of our own country and not to the so-called foreign investors, which was once the vision of the founding fathers of Pakistan and now this ideology has been lost under the shine of dollarization.

Our history is a sad story of autocratic democracy established to benefit of one self, their sycophants and hangers-on. If the Privatization Commission continues to function as they are doing now, it will not take us long to see the replay of East India Company re-surfacing in this beloved land of pures because of our total failure to tackle the issue of poverty, loan liability and financial deficit, which have on the contrary increased manifold. Therefore Pakistan has to re-think about its immediate and long-term requirements without politicizing the issue. The earlier this happens the better it will be. With this hope we expect from our rulers that they will realize that Islam and Pakistan is the bone of contention for the World Jewry, which is working under the captaincy of George W. Bush, who can never be our well wishers. Therefore it is the need of the time to forge unity in our ranks without any further loss of a minute, an hour or a day. Who lives if Pakistan dies and who dies if Pakistan lives?


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