Pakistan Steel Mills: A crucial strategic Assett

Posted on 25 May 2008. Tags: Pakistan Steel Mills

Noticias de Rupia | Nouvelles de Roupie | Rupiennachrichten | ??????? ????? | ???? | Roepienieuws | Rupi Nyheter | ??????? | Notizie di Rupia | PAKISTAN LEDGER | ???????? ????? | Moin Ansari | ???? ??????? | New York | May 25, 2008 | The Pakistan Steel Mills is in the eye of the storm, because its “sale” started the inevitable downfall of President Musharraf. In the corruption scandal of the decade, Prime Minister Shaukat Azaz tried to pawn off the Steel Mill at a vew low price to an Indian conglomerate with a Russain front. Chief Justice Iftikhar Chaudhry stopped the privatization of the Mills, which brought the wrath of General Musharraf who contrary to constitutional provisions dismissed the Judge in what is known as “extra constitutional measures” in Pakistan. Pakistanis across the political spectrum opposed the dismissal of the Judge as well the Musharraf’s second coup–this time against his own government.

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Very few third world countries produce steel. Establishing steel manufacturing in Pakistan was a major feat. Acquisition of steel manufacturing technology in the 60s and 70s was like acquiring a nuclear processing plant plant today. From 1947 to 1973 Pakistan struggled with all Western powers to establish a steel plant in Pakistan. No country, not even the US, or the SEATO or CENTO allies sold a steel plant to Pakistan. American, British and French private firms were prohibited from exporting plants and steel manufacturing technology to Pakistan.

The Pakistan steel mill is Pakistan’s largest industrial complex. The plan for the steel mill was created in 1968 by President Ayub Khan, but it was really the work of Zulfiqar Ali Butto’s visit to the USSR in 1972 that consecrated the deal.

Pakistan Steel Mills supported Pakistan’s defense production in producing tanks, missiles, sugar mills, general construction, bridges, and of course Pakistan’s nuclear programs. With a boom in construction the steel mill will be seminal in supporting the new economy as well as the various pipeline projects.

The Pakistan Steel Mill produces 1 million tons of steel. It was to be upgraded by the Russians to 2 million and then upgraded by the Chinese for 3 million tons. Those expansion projects are the need of the hour.

Pakistan Steel Mills

In 1968 the Government of Pakistan decided that the Karachi Steel Project should be sponsored in the public sector, for which a separate Corporation, under the Companies Act, be formed. In pursuance of this decision, Pakistan Steel Mills Corporation Limited was incorporated as a private limited company to establish and run steel mills at Karachi. Pakistan Steel Mills Corporation concluded an agreement with V/o Tyaz Promexport of the USSR in January, 1969 for the preparation of a feasibility report for the establishment of a coastal-based integrated steel mill at Karachi.

In January 1971 Pakistan and the USSR signed an agreement under which the latter agreed to provide techno-financial assistance for the construction of a coastal-based integrated steel mill at Karachi. The foundation stone of this vital and gigantic project was laid on 30th December, 1973 by the Prime Minister of Pakistan Zulfikar Ali Bhutto. The mammoth construction and erection work of an integrated steel mill, never experienced before in the country, was carried out by a consortium of Pakistani construction companies under the overall supervision of Soviet experts.

Pakistan Steel not only had to construct the main production units, but also a host of infrastructure facilities involving unprecedented volumes of work and expertise. Component units of the steel mills numbering over twenty, and each a big enough factory in its own right, were commissioned as they were completed between 1981 to 1985, with the Coke Oven and Byproduct Plant coming on stream first and the Galvanizing Unit last. Commissioning of Blast Furnace No.1 on 14th August, 1981 marked Pakistan’s entry into the elite club of iron and steel producing nations.

The project was completed at a capital cost of Rs.24,700 million. The completion of the steel mill was formally launched by the then-President of Pakistan on 15th January, 1985. Pakistan Steel today is the country’s largest industrial undertaking, having a production capacity of 1.1 million tonnes of steel.

THE EYE OF THE STORM:

To a question, Qayyum said once the then prime minister Shaukat Aziz summoned him and asked him to record a statement in favour of privatisation of the Steel Mills before the Supreme Court. “In response we will accommodate you on a very lucrative post. I told him, Sir, by making me such an offer you have disgraced me,” General Qayyum said.The News

Lt Gen (retd) Abdul Qayyum further disclosed that once Shaukat Aziz called him on phone and asked him to engage Wasim Sajjad, Sharifuddin Pirzada and Abdul Hafiz Pirzada for the case. But I told him that I have engaged Kamal Azfar. They (Aziz) asked about the fee and I told him that he has engaged him for Rs 700,000 to which the then prime minister said that the Mills should pay Rs 6,200,000 to Wasim Sajjad, Rs 3,500,000 to Abdul Hafiz Pirzada and Sharifuddin Pirzada to be paid even above them.

The former chairman of the Steel Mills said he told Shaukat Aziz that the price of only land of the Steel Mills was Rs 40 billion whereas he was fixing the price of whole the project at Rs 21 billion. This is too low, he further informed the prime minister. He said the prime minister turned a deaf ear to his view and insisted to wrap up the deal before long.

Gen Qayyum said, “I then sent my written objections in a letter. He sent me an insulting answer saying that it falls under their purview.”

Gen Qayyum said painfully that he did not know the reserved price. Some people participating in the bidding did know it, he said.

Gen Qayyum expressed the view that Shaukat Aziz’s bad intention was involved in this matter and an FIR should be registered against him.

Replying to a question, Gen Qayyum said he had tried thrice to meet the president to discuss this matter but he was not granted time. “Then one day I received a phone call saying that I should consider myself out of the job.”

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