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Dawn Editorial 6 June 2020

PSM workers’ sacking

THE government’s decision to sack 9,350 employees of the Pakistan Steel Mills at a time when the State Bank is pushing banks to hand out billions in cheap loans to private businesses hit by Covid-10, so that they can maintain their payrolls, has come as a rude shock. The entire payroll of the largest industrial enterprise of the country has been terminated in spite of pre-election commitments by the prime minister and PTI leaders, especially Planning Minister Asad Umar, to reviving its fortunes with the help of the existing workforce through better management of its affairs. The government has decided to take the easier route after the failure of its halfhearted attempt to resuscitate PSM.
The steel mill is one of Pakistan’s most politicised public-sector businesses and had been suffering large losses and accumulating massive liabilities for over a decade. This eventually resulted in the PML-N administration shutting it down in July 2015 as part of a plan to privatise it. According to the federal minister for industries, who held a press conference a day after the ECC approved the plan to fire the employees, the company currently owes Rs210bn to banks. The sum is in addition to Rs90bn that the government spent to bail it out and Rs55bn to pay wages since its complete shutdown. Yet the decision to sack the entire staff is hard to justify, especially under the present circumstances when millions are losing their jobs owing to the deepening economic recession triggered by the pandemic. The reported death of two mill employees during a protest in Karachi against the decision shows the stress the workers are going through.
It is unfair to solely blame the employees for PSM’s collapse. The fact is that years of poor management and failure to appoint the right people with the relevant experience and knowledge to the top posts have done more damage than overstaffing or trade unionism. The mill was designed for an annual production of 2.2m tonnes to be profitable. But its capacity never exceeded 1.1m tonnes because of little investment and lack of interest shown by those entrusted with its affairs. Still, it remained profitable for most of the years between 1985 — the year it began commercial operations — and 2008 — the last year it earned profits. Post-2008 bailout packages could not revive it because they were not accompanied by a restructuring plan to turn it into a viable concern. The government just wanted to keep it afloat for privatisation as its production dropped below 20pc of the total capacity. The government claims that the employees’ sacking is part of its plan to revamp the mill. If so, such undoubtedly questionable mass dismissals would have been seen in other loss-making SOEs too. What kind of restructuring plan calls for mass layoffs unless investors are more interested in the enterprise’s assets than in resurrecting it?

 
 

A common threat

THE Pakistan-India relationship continues on its rocky trajectory, with multiple challenges obstructing the path to peace. Overcoming them is difficult, especially when there is an apparent lack of appetite for peace in New Delhi. However, there is some positive movement where the fight against locusts is concerned. As the Foreign Office said on Thursday, both Pakistan and India have joined forces — under the auspices of the UN’s Food and Agriculture Organisation — to combat the threat these pests pose to regional food security. Under the umbrella of the Commission for Controlling the Desert Locust in South-West Asia, which also includes Iran and Afghanistan, both sides are working to counter the threat posed by giant swarms that have devoured crops across the region. After causing havoc here, the locusts have headed eastwards towards India, and it is expected that more swarms will make their way to this region later in the month.
The cooperation over the locust invasion shows that despite the bitterness that affects bilateral ties, both states can work together to tackle common threats. These include pollution — the toxic smog that chokes Lahore and New Delhi knows no boundaries, but can be tackled together. Moreover, the Covid-19 pandemic continues its deadly march across the planet, and a regional approach can help both states combat the contagion. This is not to say that differences will disappear overnight; Pakistan has major, legitimate concerns over New Delhi’s brutal tactics in held Kashmir and India’s treatment of its own Muslim citizens, as well as frequent, deadly cross-LoC fire. Yet while these thorny issues need steady efforts and diplomacy to resolve, other problems can be dealt with in a less complicated manner. If bilateralism does not suit the states at this juncture, then multilateral or regional fora, such as the FAO anti-locust body, can be used to tackle common threats. Moreover, Saarc, which has largely become moribund, can also be reactivated to approach the relatively ‘soft’ issues that afflict South Asia, such as climate change, food security, health, etc. It is hoped a regional strategy is chalked out to deal with the locust issue, considering the threat it poses to food security, while multilateral fora can also be used to address other common issues. Once progress is achieved on these fronts, perhaps both states will one day have the confidence to approach the more difficult questions that have bedevilled South Asia for over seven decades.

 
 

Fuel shortages

THE shortages of vehicular fuel in various parts of the country are grounds for concern and must not be allowed to turn into a full-scale crisis of the sort the country saw in 2014. The shortages exist because of the confluence of two unusual situations. One is the lockdown of April and May during which demand for vehicular fuel plummeted, while the other is the collapse of oil prices, followed by their rapid rise. The two are linked in the sense that international oil prices collapsed because of the global lockdowns, but their effects have transmitted themselves to Pakistan’s oil supply chain separately. Oil companies were reluctant to book shipments of the fuel at a time when local demand had fallen and inventories had piled up. And when the lockdown was lifted and demand returned, the government had passed through the lower price to the pumps, which made it difficult for the companies to arrange future shipments.
There is no doubt that Pakistan’s oil supply chain is extremely fragile and can run into difficulties very quickly. Both operational and financial problems can cause the supply chain to break down. But it is always the government’s responsibility to ensure this does not happen. This is because vehicular fuel is too important a product to be left to its own devices, and also because the government assumes responsibility for pricing as well as supply issues. At the moment, the leadership seems committed to passing through major oil price benefits to the consuming public, against the advice of the Finance Division which sees an opportunity to generate revenue amid the price declines, as well as of the oil marketing companies, who argue that declines in the price at the pump complicate the effort to arrange future supplies. One can be agnostic on the question of pricing, but if the supply chain is disrupted to the point of creating a fuel crisis, the responsibility must squarely lie with the government.

 

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