Privatizing Pakistan Steel
The writer heads the Sustainable Development Policy Institute.
The Pakistan Steel Mills (PSM) corporation’s story presents classic case studies, both on why state-owned enterprises (SOE) fail, and why compromising transparency backfires in the privatization process of SOEs.
Pakistan Steel started its full commercial operation in 1984, eleven years after its foundation stone was laid. However, within 22 years – in 2006 (when it was operating on its optimum capacity for at least the last three years) – it was privatized to a consortium of foreign and local investors. The hasty process of privatization became controversial and the Supreme Court of Pakistan annulled its sale giving it back to public-sector management.