Pakistan Steel Mills Essay

Topic: Privatization of Pakistan Steel Mills Subject: Pakistan Economic Policy Submitted By: M. Faizan Sohail (7133) Faculty: Shahid Iqbal Date of Submission: 12th August 2010 Pakistan Steel Mills Introduction: Pakistan Steel Mills is the producer of long rolled steel products in Karachi, Pakistan. The Pakistan Steel Mill is the country’s largest industrial undertaking having a production capacity of 1. 1 million tons of steel. The enormous dimensions of the project can be visualized from the construction inputs which involved the use of 1. 9 million cubic meters of concrete, 5. 70 million cubic meters of earth work (second to Tarbela Dam), 330,000 ton of machinery, steel structures and electrical equipment. It’s unloading and conveyor system at Port Qasim is the third largest in the world and its industrial water reservoir with a capacity of 110 million gallons per day is the largest in Asia. A 2. 5 km long sea water channel connects the sea water circulation system to the plant site with a consumption of 216 million gallons of sea water per day. Soviet Contribution to Steel Mill 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 huge 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. Corporate Business and Net worth 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. on 14 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 15 January, 1985. Pakistan Steel today is the country’s largest industrial undertaking, having a production capacity of 1. 1 million tons of steel. Founders of Pakistan Still Mills The real founders of Pakistan Steel Mills are Prof. Dr. Niaz Muhammad, Wahab Siddiqui and Russian scientist Mikhail Koltokof. It was the hard work of Dr. Niaz Muhammad that thousands of scientists and technical staff got trained by him. His inspirations and innovations got him the highest award from President of Pakistan, and also from Government of Russia. The Government of Pakistan has given him Pride of Performance. His nomination for Nobel Prize was biggest respect what Pakistan achieved. Social obligations Pakistan Steel Mills, besides its core activities, has done a lot in making the environment in and around Pakistan Steel green and beautiful through the addition of three unique projects: the Quaid-I-Azam Park, The Quaid-I-Azam Cricket Park and the Quaid-I-Azam Beach. The Quaid-I-Azam Park, which spreads out over an area of 45acre, consists of a series of six interconnected lakes, lush green lawns and grassy terraces, colorful flower beds, fountains, life- size steel-made models of wild and marine animals, a jogging track, a bird sanctuary and mini-zoo, as well as a children’s play and recreational ground and boating facilities. The other unique project, known as the Quaid-I-Azam Cricket Park, has been established amidst the pleasing surroundings of Steel Town, featuring sloping grassy terraces all around for spectators and four diagonally-located hillocks with seating arrangements to provide a panoramic view of the game. This is spread over an area of 32000 sq. meters and is equipped with all the necessary facilities, conforming to international standards. The third project, Quaid-I-Azam Beach, is being developed with the aim to provide a seaside recreational spot to the employees of Pakistan Steel, especially those residing at Steel Town and Gulshan-e-Hadeed. Pakistan Steel is also on its way to establish Quaid-I-Azam National Park over a vast area of 400acre adjacent to Steel Town which shall be a tremendous contribution in the development of the environment. The organization also has a football team Pakistan Steel FC that currently competes in the Pakistan Premier League. History & Privatization of Pakistan Steel Mills After independence in 1947, it did not take long for Pakistan to come to the realization that progressive industrial and economical development would be impossible without the possession of a self reliant iron and steel making plant. The dependence on imports would cause serious setbacks to the country along with an extortionately high import bill which would be impossible to support. 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. Bhutto  had signed a contract with the former USSR to help build the project. The project was estimated  to cost Rs 10 billion but was completed at a cost of Rs 30 billion and took ten years to finish. The foundation stone of this vital and gigantic project was laid on 30 December, 1973 by the Prime Minister of Pakistan Zulfikar Ali Bhutto. The completion of the steel mill was formally launched by the then-President of Pakistan on 15 January, 1985. The steel mill project provided 20,000 jobs for workers from all over Pakistan. Unfortunately, from the very beginning plotting were launched by the bureaucracy against the workers in order to destroy their moral and ruin their potential. A propaganda campaign was started in the media to give the impression that the project was â€Å"a burden on the national economy† and that it was â€Å"a white elephant†. This campaign gradually became noisier  and  the idea that there were 8000 surplus workers who were a burden and needed to be gotten rid of was widely propagated. However, the bureaucracy and the press found it impossible to attack the workers due to the political strength and unity of the militant trade unions. With its propaganda having failed and its aims in ruins, the bureaucracy resorted to the traditional and criminal tactics of the ruling class – the tactic of â€Å"divide and rule†. In 1986 Zia-ul-haq dictatorship  began a series of brutal political assaults in Pakistan. The ruling class succeeded in generating racial  conflicts among workers, which  not only divided the workers but also weakened the labor movement. This tactic of â€Å"divide and rule† also affected Pakistan Steel. In 1988 the trade unions were divided on racial grounds which resulted in bloody hatred and ended  the traditional revolutionary unity of the unions. The labour movement was constantly harassed and its leadership degenerated and became demoralized. In 1992 Prime Minister Nawaz Sharif appointed a General, Sabeeh Qamar-uz-zaman, as chairman of Pakistan Steel. He was given the task of improving the situation and â€Å"normalizing† the working conditions. He imposed an undeclared ban on the trade unions at Pakistan Steel. Terror and the harassment  of the unions were  enforced in the name of discipline. An  internal security intelligence  unit, the  FIU, was also established and was headed by an army colonel. This notorious  intelligence unit â€Å"discovered† that 1500 workers were a â€Å"security risk†. These workers were punished and removed from their jobs. In 1995 Benazir Bhutto, in her second term in office, reinstated most of these workers. However not all of them were reinstated. During his second tenure in 1997, Nawaz Sharif  introduced  many reactionary anti-labour laws. The ex-chief of the FIU, Colonel Afzal, a batch mate of General Musharraf, was appointed as managing director of Pakistan Steel. This gentleman was twice suspended on corruption charges from his previous post as chief of the FIU, yet somehow he still merited the promotion to chairman. After Musharraf overthrew Nawaz Sharif in 1999, he introduced his â€Å"Seven Point Agenda† to the nation. Not surprisingly his top priority was the introduction of the brutal policies of rightsizing and downsizing, which in practice meant maximizing  unemployment. These policies  were sweetened with another Black Law: the Industrial Relations Ordinance 2000. In June 2000 the chairman of Pakistan Steel announced the immediate dismissal of 436 workers. The workers were informed in their dismissal orders that their services were no longer required. This was just the beginning however, and a new policy was enforced where workers were requested to enjoy the â€Å"benefits† of the VRP (Volunteer Retirement Policy). All of these laws and policies were exercised in the worst manner in Pakistan Steel; it became a model and an example to whole country, and to all workers and trade unions. 8500 jobs were ruthlessly cut by these barbaric policies. These sackings affected the workers deeply, and led to a change in consciousness. On December 31, 2001 the workers of Pakistan Steel organized a general strike against the anti-labor policies of the chairman and the government. The workers blocked all roads and access to the mill. On February 7, 2003 the workers again organized a strike. The authorities attempted to stop the strike by using the tactics of delay. But this only served to provoke the workers, and on March 8, 2003 the workers again blocked the roads. This time they also occupied the mill. This action paralyzed the authorities but unfortunately the struggle was lost because the workers were betrayed at the negotiating table by the trade union leadership. It was apparent that  this struggle could have galvanized the working class nationally  and that it could have found a mass basis. However, in the end it was drowned in petty compromises and conciliations. On December 30, 2003 Chairman Afzal was suddenly dismissed and again a General, Abdul Qayum was appointed as the new  chairman. He immediate gave the impression to the workers that the situation would be totally reversed and that the workers would not have to fear any  more suspensions or dismissals. He also announced an extension plan for Pakistan Steel that would create more jobs. However, just before initiating the extension plan, it was announced that Pakistan Steel would be privatised rather than proceed with the extension. This was a clear declaration of a severe attack on the rights of the workers. This was a clear attack  on their jobs and their working conditions. This declaration provoked 12,500 workers who are drawing the conclusion that they need to fight back. The government was not as lucky in the case of Pakistan Steel Mills as it had been with regard to certain other privatization deals.