Pakistan Steel Mill : PM earned Kudos

The Steel Mills case

By Ayesha Siddiqa

(Courtesy Daily Dawn)

Interestingly, Moeen Aftab Sheikh was removed even before an inquiry was instituted or a report submitted about his supposed wrongdoings.

Legally, this hurried action would be considered mala fide since no charge-sheet was brought against the gentleman and the decision was taken before the inquiry report. The case raises two fundamental questions: first, does the decision indicate the government’s concern for accountability, or does it indicate its inability to run a business and appreciate the problems caused by economic recession?

Or perhaps the objective was merely to get rid of the chairman, an officer with an unblemished career in government for 35 years. Second, was the media fair in embarking upon a witch-hunt without ascertaining the facts of the case?

The government still does not know the exact losses, as there are varied figures. It’s the PSM management which estimated the concern’s losses at Rs21bn. However, the estimate given in the special report of the auditor-general gives a lower figure of Rs9bn. Also, why did Mr Gilani not wait for the report from the PSM’s auditors?

This was the prime minister’s opportunity to earn kudos from the public for taking someone out without taking the trouble to explain to the media that the huge loss was not caused by individual corruption but was a result of global economic recession.

This is not the first time that PSM has incurred huge losses. The organisation had run an accumulated loss of over Rs20bn for the period 1985-90 and 1993-99, which could have been paid off when the mill started making money from 2001-02 to 2008. Unfortunately, PSM fell on bad times again due to a slump in the international market after April 2008.

Another misfortune was the absence of a national steel policy, which meant that there was no plan to bail out the national steel-making concern. The government did not make any effort to stop the customs department from allowing private importers from importing secondary steel at the lower import price meant for primary steel. This scam meant that the private sector could undercut the PSM as they managed to import and sell low-grade steel at around Rs40,000 per tonne compared to the PSM’s Rs42,000 per tonne, thus earning a mark-up of at least Rs10,000-12,000.

An additional problem was caused by the dumping of 0.5 million tonnes of steel by the ship-breakers and electricity loadshedding, which forced numerous downstream industries dependent on PSM to close down. So, orders for about 300,000 tonnes of steel were cancelled. The Steel Mills’ management was stuck with an inventory of Rs9bn, which it tried to dispose of by altering the marketing strategy.

The decision was taken during a meeting attended by the chairman and members of the finance and accounts, commercial and marketing departments, the minutes of which were duly recorded. Instead of selling according to a quota system, a policy of open sales was introduced. This meant that major investors could pick up large quantities of steel and help PSM stay afloat.

The main beneficiaries of the new policy were five different concerns: Metropolitan, Amreli, Abbas Engineering, Al-Abbas Steel and Abbas Steel. Contrary to the belief that the lowering of prices was meant to benefit one of President Zardari’s close friends, there were a total of 232 beneficiaries. Interestingly, the friend (Riaz Lalji) continues to be a significant buyer even after Aftab Sheikh’s sacking due to his greater production capacity rather than anything else.

The decision to lower prices was meant to save the mill. Industrial experts are of the view that shutting PSM is not a possibility because restarting it would not only be technologically difficult but also cost approximately Rs20bn. Meanwhile, the government would have to foot the bill for PSM’s 17,000 employees, which stands at about Rs600m per month.

In any case, the open sale policy was meant to solve the liquidity problem for which the management also used workers’ gratuity. This is not odd since all public and private sector firms do so. The Karachi shipyard under the navy’s management had also done the same in the mid-1990s to stay afloat. Using funds like gratuity or the contractor’s seed money is a done thing for a business concern, especially for the PSM, which badly needs funds for its modernisation.

The Steel Mills is 25 years old with a limited production capacity of a million tonnes. Its British consultant Corus had advised its increasing capacity to about three million tonnes for the concern to become profitable. Resultantly, the management signed an MoU with the Chinese firm MCC which would not become binding unless approved by the ministry of industries and production. It is a misplaced accusation that the government was being forced to incur a debt of Rs2.2bn since no final agreement was signed and there was nothing binding on the government until MCC produced a feasibility study. Had the media seen the MoU, they would have found that the document was not binding on the government until certain conditions were met. In any case, investment for development purposes is not money lost.

Equally baseless is the accusation about the management making money from a contract with the Railways since nothing was signed.

There is also no evidence of corruption since all procurement was done in accordance with the Public Procurement Regulatory Authority (PPRA) regulations and implemented by the committee formed by the government. The accusation of higher prices being paid for raw material and freight is a fallacy since the price of coal, iron ore and coke varies in the international market and the management had to adapt to the changes, which it could not do all the time being a public-sector organisation.

Perhaps what is needed is an inquiry into what the government achieved with its sudden and artificial show of justice. More importantly, is the media above board and should it be allowed to lynch people without a proper hearing which is the norm in civilised societies?

The writer is an independent strategic and political analyst.

Terrorism : Deoband Stance

I have taken it from “Monthly Rahimia”.The Magazine Sep ‘09 issue can be downloaded from

http://www.rahimia.org/

“Rein in The Militants.” Urges China

ISLAMABAD // China has called upon Asif Ali Zardari, the president of Pakistan, to take action against its growing militant problem, citing the links between extremist activities in both countries.

Officials are now confirming that the meeting between Meng Jianzhu, China’s minister for public security, and Mr. Zardari in Shanghai in February addressed concerns of the Chinese government that the militant problem in Pakistan’s tribal region presents a significant security challenge to the entire region.

Chinese officials are reported to have revealed that the East Turkistan Islamic Movement (Etim), a separatist Uighur group from China’s Xinjiang province, is plotting an attack to coincide with 60th anniversary celebrations of the communist revolution, scheduled for Oct 1. The plan for the attack, according to Chinese officials, originated in Pakistani tribal areas.

“They told me that the Etim has its military headquarters in [the Federally Administered Tribal Areas] and is planning to attack China on the 60th anniversary celebration of the communist revolution,” Mushahid Hussain Syed, the former chairman of the Senate foreign affairs committee, told The Nation, a Pakistani daily newspaper. Beijing dispatched a special envoy to Islamabad in March to discuss the alleged threat posed by the Etim, Mr. Syed said.

This week, China claimed to have killed 18 Etim militants in Xinjiang. Last week, two Uighur separatists were executed in Xinjiang for a deadly attack on police in the run-up to the Beijing Olympics.

Labeled as a terrorist group both by Beijing and Washington, the Etim has long maintained a low profile in Pakistan’s tribal areas, although it is suspected to have links to al Qaeda. The Pakistani army was reported to have killed in 2003 Hasan Mahsoum, the group’s leader.

“China has been concerned for many years about extremists who are increasingly active in the [North West Frontier Province] of Pakistan,” said G Eugene Martin, former US deputy chief of mission in Beijing and the Washington-based director of the Hopkins-Nanjing Centre.

Once considered an “all-weather friend”, China has been talking tough with its neighbor in recent years, particularly as Pakistan’s security situation has grown volatile and economic conditions have turned ominous.

Pakistan was among a handful of nations to recognize the communist People’s Republic of China in the early 1950s. When the war broke out in 1962 between China and India over the disputed Himalayan border region, China and Pakistan forged a bond based on their shared antagonism towards India.

Mr. Zardari’s visit to China in February, the second in four months, came just days after Washington signed a landmark nuclear energy deal with India, an agreement that ruffled feathers in both Beijing and Islamabad. While China has always been a fervent supporter of Pakistan’s nuclear ambitions, there has never been a formal agreement between the two countries. China has invested heavily in the construction of several nuclear power plants in Pakistan, as well as the country’s infrastructure, including a new port in Gwadar, linking it to the Strait of Hormuz.

However, today’s dynamics between China, Pakistan and India are a far cry from what they were in the 1960s, with many experts pointing to the greater strategic benefits of a stronger China-India alliance.

“Pakistan has very few options to protect its security interests,” said Shabbir Cheema, the director of the Asia-Pacific Governance and Democracy Initiative. “China-India economic relations are expanding rapidly, so Pakistan now must keep good relations with both China and India to ensure that its security interests are protected.”

China, reputed for turning a blind eye where its allies are concerned, has used unusual force with Pakistan in recent months, following a series of abductions of Chinese nationals. Chinese are calling on Pakistan to do more to rein in militants and ensure the security of Chinese nationals in Pakistan.

War On Terror : Naawaz Clear Stance

PML(N) Leader Mian Nawaz Sharif has recently been highlighted by the American Press for his popularity in the Country.Aitezaz Ahsan has urged that America should join hands with him. He said. “If you befriend him, you can get him to move mountains.”
Nawaz Sharif denied in an interview with Reuters on Tuesday that he has had links with religious hardliners. Although members of the PML-N sometimes characterize the war on terror as America’s war and not Pakistan’s, Nawaz distanced himself from this view. We hope at least now when major political issues were resolved with the new Reconciliation strategy, two largest parties of the country will be focused against the most important threat we are facing as a nation.Nawaz Sharif clear stance at this time has the realization of the current situations as extremist elements have intensified their attacks towards Punjab. Along with it various reports are drawing attentions
Towards the alarming influence of the sectarian elements in Southern Punjab. These elements are close allies of the Jihadi elements. The political leadership will come to a consensus towards that issue; the recent Interview has clear indication towards that.
(Ali Arqam)

INTERVIEW-Pakistan’s Sharif gives Obama plan cautious Welcome

LAHORE, Pakistan, March 31 (Reuters) – Pakistan’s influential opposition leader Nawaz Sharif said on Tuesday the new U.S. administration was much better than the previous one, but needed to understand his country’s concerns as it battles extremism.

As the most popular politician in Pakistan, and someone ultimately likely to get a third chance to run the country after two stormy spells as prime minister in the 1990s, Sharif is being actively courted by the United States.

He said reaction to President Barack Obama’s new plan for Pakistan and Afghanistan, announced last week, had been “mixed” in his country.

“As we are very willing to address the concerns of all our allies and friends, I think they should also understand our problems and handicaps,” he told Reuters in his sprawling, opulent and heavily guarded estate on the outskirts of Lahore.

“It has to be reciprocal.”

Obama last week announced a tripling of U.S. development aid to Pakistan to $1.5 billion a year, but said there would be no “blank cheque” — Pakistan had to prove it was sincere in its efforts to counter an alarming rise in Islamist militancy. [ID: nN26525038]

At the same time, U.S. generals have publicly accused Pakistan’s military Inter-Services Intelligence agency, the ISI, of maintaining links to al Qaeda and Taliban militants battling U.S. forces in Afghanistan.

Sharif rejected those charges, saying there was not “any room for any suspicion of the ISI”.

“ANTI-AMERICAN FEELING”

He also called for an end to American drone attacks on Pakistan’s rugged and conservative tribal regions, which have led to civilian casualties and inflamed anti-American sentiment.

Those attacks have continued this year as U.S. forces target senior al Qaeda leaders believed to be sheltering there.

Obama said the United States would continue to go after al Qaeda in Pakistan, but would not send troops across the Afghan border into Pakistani territory, as happened in the past.

“Some of the policies followed by President Bush have given rise to a lot of anti-American feeling in Pakistan,” Sharif said.

“For example the drone attacks are affecting our relationship. The people of Pakistan have criticized them very severely. It damages the sovereignty of our country. On this issue the United States of America must move carefully.”

Sharif considered imposing sharia law, and has often been accused of having links to religious conservative hardliners.

He dismissed the accusation as propaganda unleashed by the man who deposed him in a coup, General Pervez Musharraf.

Nevertheless, members of his Pakistan Muslim League sometimes characterize the war on militants as being America’s war, not Pakistan’s. Sharif distanced himself from this view.

“The concerns of the West are genuine and they need to be addressed in all seriousness. The problems Pakistan faces are very tough and very serious, and in fact are endangering our state in a very serious way.

“I personally think that no party single-handedly, whether in the government, or outside the government, would be able to deal with these problems. We all will have to fight these problems together.”

Sadly, the chances for political unity in Pakistan appear slim, with Sharif locked in a bitter battle with President Asif Ali Zardari for months.

On Tuesday, the Supreme Court suspended a ruling barring Sharif and his brother from holding elected office.

Speaking shortly before that decision, Sharif said Zardari still needed to surrender sweeping presidential powers and restore them to the prime minister, as he had promised to do, warning the country would be “very unlucky” if he did not.