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61-599: The Pakistan Steel Mills Corporation , colloquially referred to as Pak Steels , is a Pakistani state-owned company that produces long-rolled steel and heavy metal products in the country. Headquartered in Karachi , Sindh , the PSMC is currently the largest industrial mega-corporation in Pakistan, having a production capacity of 1.1–5.0 million tonnes of steel and iron foundries. Built with extensive contributions and from

122-525: A children's play and recreational ground and boating facilities. The steel mill is also active in sports development and also has a football team Pakistan Steel FC that currently competes in the Pakistan Premier League . Since its foundation, the steel mills has been under the management of government-ownership and strictly put under the close coordination of civil bureaucracy . In 2006, Prime Minister Shaukat Aziz decided to integrate

183-529: A foreign exchange cost of Rs. 878Mn. The European banks offered loans for this project, which confirmed the technical and financial viability of the project. All attempts were dismissed after projects were politicized enough in the civil bureaucracy. The Pakistan Steel Mills was established as an integrated steel mill under a programme called the Nationalisation Programme in the 1970s. The foundation stone for this gigantic integrated project

244-586: A government agreement, upon which, the Soviet Union agreed to provide techno-financial assistance for the construction of a coastal based integrated steel mill at Karachi. In 1956, Krupp industries of West Germany offered to set up a steel mill based on Kalabagh iron ore, coal and most other minerals available within about 18 kilometres (11 mi). The project was dismissed by the Ministry of Energy led by its minister Zulfikar Ali Bhutto who accepted

305-415: A government owning all or a controlling stake of the company's shares . This form is often referred to as a state-owned enterprise . A state-owned enterprise might variously operate as a not-for-profit corporation , as it may not be required to generate a profit; as a commercial enterprise in competitive sectors; or as a natural monopoly . Governments may also use the profitable entities they own to support

366-452: A host of infrastructure facilities involving unprecedented volumes of work and expertise. Component units of the steel mill numbering over twenty and each a big enough factory in its own right were commissioned as they were completed between April 1981 to August 1985, with the coke ovens and byproducts plant coming online first and the galvanizing unit last. The commissioning of Blast Furnace Number 1 on 14 August 1981 marked Pakistan's entry into

427-417: A non-payer cannot be excluded from (such as street lighting), services which benefit all of society rather than just the individual who uses the service. Public enterprises, or state-owned enterprises, are self-financing commercial enterprises that are under public ownership which provide various private goods and services for sale and usually operate on a commercial basis. Organizations that are not part of

488-488: A production capacity of 1.1 million tonnes of steel and not completed to its lay-out design of 2.2 MTPY in a period of 40 years (1973 to 2013). Pakistan Steel Mills is one of the most enormous and gigantically expanded industrial complexes in the country that is located at a distance of 40 km Southeast of Karachi at Bin Qasim near Port Muhammad Bin Qasim. It was found to be an ecologically preferable location, alongside

549-423: A specific state institution or branch of government, used exclusively by that branch, such as a research laboratory. The latter refers to assets and resources owned by the population of a state which are mostly available to the entire public for use, such as a public park (see public space ). In neoclassical economic theory , the desirability of state ownership has been studied using contract theory . According to

610-443: A tidal creek and having a wind direction away from the city of Karachi. Pakistan Steel Mills is spread out over an area of 7,550 hectares (18,660 acres) (about 75 km or 29 sq mi) including 4,205 ha (10,390 acres) for the main plant, 3,266 ha (8,070 acres) for the township and 81 ha (200 acres) for the 110 MG water reservoir. In addition it has leasehold rights over an area of 3,043 ha (7,520 acres) for

671-650: A unified decision that the "Karachi Steel Project" would be sponsored in the state-public sector , under which a separate corporation sanctioned by the Companies Act, would be formed. In pursuance of this decision, the Pakistan Steel Mills Corporation Limited (PSM Ltd.) was commissioned and incorporated as a private limited company in a public sector in accordance with the Companies Act of 1913, to be established in Karachi , Sindh Province of Pakistan. Contacts were made with

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732-406: A whole. As such, state ownership is only one possible expression of public ownership, which itself is one variation of the broader concept of social ownership. In the context of socialism, public ownership implies that the surplus product generated by publicly owned assets accrues to all of society in the form of a social dividend , as opposed to a distinct class of private capital owners. There

793-736: A winning bid of $ 362 million for a 75% stake in Pakistan Steel Mills at an open auction held in Islamabad. The consortium including the Magnitogorsk Iron and Steel Works ( Russia ); the al-Tuwairqi Group of Companies ( Saudi Arabia ); and the Arif Habib Securities (Pakistan) paid a total Rs. 21.6 billion ($ 362 million), or Rs. 16.8 per share, to take control of Pakistan's largest steel manufacturing plant. Tuwairqi Group of Companies, one of

854-550: Is a natural monopoly or because the government is promoting economic development and industrialization . State-owned enterprises may or may not be expected to operate in a broadly commercial manner and may or may not have monopolies in their areas of activity. The transformation of public entities and government agencies into government-owned corporations is sometimes a precursor to privatization . State capitalist economies are capitalist market economies that have high degrees of government-owned businesses. Public ownership of

915-416: Is a process of transferring private or municipal assets to a central government or state entity. Municipalization is the process of transferring private or state assets to a municipal government. A state-owned enterprise is a commercial enterprise owned by a government entity in a capitalist market or mixed economy . Reasons for state ownership of commercial enterprises are that the enterprise in question

976-416: Is a wide variety of organizational forms for state-run industry, ranging from specialized technocratic management to direct workers' self-management . In traditional conceptions of non-market socialism, public ownership is a tool to consolidate the means of production as a precursor to the establishment of economic planning for the allocation of resources between organizations, as required by government or by

1037-563: Is desirable. In their model, the government and a private firm can invest to improve the quality of a public good and to reduce its production costs. It turns out that private ownership results in strong incentives to reduce costs, but it may also lead to poor quality. Hence, depending on the available investment technologies, there are situations in which state ownership is better. The Hart-Shleifer-Vishny theory has been extended in many directions. For instance, some authors have also considered mixed forms of private ownership and state ownership. In

1098-481: Is difficult to determine the current value of assets of Pakistan Steel Mills, while others approximating the business assets reaching to then range from Rs. 72.5Bn to Rs. 100Bn of total value. By estimating, including the heavy machinery , dividends, facilities, and external and internal assets, the market price of the land of the Steel mills are exceeding the amount of Rs. 125.5Bn, as per the government estimates against

1159-755: Is widespread corruption after 2008 in management and CBA leaders, political recruitments, awarding of promotions and major posts on the basis of favoritism . On July 4, 2023, the Government of Pakistan announced that it decided to shut down the Steel Mills as there was no available buyer due to the heavy losses it had been incurring for years. In June 2020, the Government of Pakistan decided to make redundant 9,350 employees of Pakistan Steel Mills. In November 2020, Pakistan Steel Mills sacked 4,544 employees, including divisional and assistant managers, due to its cost reduction exercise. At one stage during its lifetime,

1220-646: The Council of Scientific and Industrial Research (PCSIR) and put forward the concept to the Five-Year Plans of Pakistan (1955–1960). In 1956, Soviet premier Nikolai Bulganin offered technical and scientific assistance to Prime Minister Suhrawardy regarding the steel mills and expressed interest in establishing the country's first steel mills. The project was comprehensively debated in the governments of Prime Minister Huseyn Suhrawardy and President Ayub Khan . The manufacturing process, supply sources of

1281-471: The Soviet Union in the 1970s, it is among the largest industrial mega-corporation complexes, vastly expanded in an enormous dimension with construction inputs involving the use of 1.29 million cubic meters of concrete and 5.70 million cubic meters of earthworks , as well as containing approximately 330,000 tonnes of heavy machinery, steel structures and electrical equipment. A controversial attempt

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1342-567: The Supreme Court of Pakistan vide SMC No. 9/2006 against the privatization citing irregularities in the process which was accepted by the Chief Justice of Pakistan Justice Iftikhar Chaudry . The Supreme Court on 8 August 2006 held that the entire disinvestment process of the Pakistan Steel Mills reflected haste, ignoring the profitability aspect and assets of the mills by the financial adviser before its evaluation. The transaction

1403-681: The United States but the U.S. government showed lack of ambition and interest in the project; therefore the studies were sent to the Soviet Union , which took the initiatives. The United States refused to give any kind of assistance. Finally, an agreement was reached with the V/O Tyaz Promexport of the Union of Soviet Socialist Republics (USSR) in January 1969. In 1971, Pakistan and the Soviet Union finally proceeded to enter into

1464-423: The means of production is a subset of social ownership , which is the defining characteristic of a socialist economy. However, state ownership and nationalization by themselves are not socialist, as they can exist under a wide variety of different political and economic systems for a variety of different reasons. State ownership by itself does not imply social ownership where income rights belong to society as

1525-417: The state sector , is the part of the economy composed of both public services and public enterprises . Public sectors include the public goods and governmental services such as the military , law enforcement , infrastructure , public transit , public education , along with health care and those working for the government itself, such as elected officials . The public sector might provide services that

1586-528: The Coke Oven and Byproduct Plant coming on stream first and the Galvanizing Unit last. Commissioning of Blast Furnace No.1 on 14 August 1981 marked Pakistan's entry into the elite club of iron and steel producing nations. The project was not completed at a capital cost of Rs. 24,700 million and commissioned for production of 1.1 MTPY. Due to its infrastructure and enormous expansion capacity, it

1647-498: The Hart-Shleifer-Vishny model it is assumed that all parties have the same information, while Schmitz (2023) has studied an extension of their analysis allowing for asymmetric information . Moreover, the Hart-Shleifer-Vishny model assumes that the private party derives no utility from provision of the public good. Besley and Ghatak (2001) have shown that if the private party (a non-governmental organization) cares about

1708-556: The PSM had 30,000 employees which has now been reduced to an estimated 9,000 employees out of which many employees had retired. After the creation of Pakistan in 1947, the Government of Prime Minister Liaquat Ali Khan realized the importance of the local production of iron and steel. Initially, the dependence on imports caused economic setbacks to the state in the form of high import costs. The initial idea and studies were conceived by

1769-698: The Russian-Saudi-Pakistan investors as null and void. Authored by Chief Justice of Pakistan Justice Iftikhar Mohammad Chaudhry, the judgement said the entire exercise reflected haste by the Privatisation Commission (PC) and the Competitive Committee on Privatisation (CCP). The PC had processed 30 March final report of the financial adviser the same day and a meeting of the PC board and a summary had also been prepared

1830-777: The Soviet studies instead as Bhutto favored the idea to establish one single enormous steel mill based 100% on imported steel and iron ore instead of local ore at Kalabagh District. In June 1966, another West German steel firm, the Salzgitter AG , produced ~5,000 tonnes of quality steel from 15,000 tonnes of Kalabagh iron ore in the presence of some international experts, and sold it to Volkswagen . The company offered in August 1967 to set up Kalabagh Steel Mill of over 0.8 million tonnes per year capacity based on Kalabagh iron ore and imported coal at an estimated cost of Rs. 1.55Bn, including

1891-530: The State civil service ( Fonction publique d'État , FPE) includes teachers and soldiers, and employs 44% of the workforce. The local civil service ( Fonction publique territoriale ; FPT) is made up of employees of town halls and regional councils: 25% of the workforce. The hospital civil service ( Fonction publique hospitalière , FPH) consists of doctors and nurses and is 21% of the workforce. Right-libertarian and Austrian School economists have criticized

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1952-573: 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 18 ha (45 acres), 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

2013-404: The bailout plan was dismissed by the Government of Pakistan . Finally, the steel mills was brought back to government ownership and management under an inverse counter-measure Nationalization Programme of Prime Minister Yousaf Raza Gillani . Since then, its operational plant capacity has reached 30%–50% after seeking the government's financial assistance. One of the key reasons for PSM's downfall

2074-488: The current nine to twelve members as well as approving another bail out plan. In a matter of weeks, the private-sector voluntarily handed over the operations of steel mills to government-ownership management, a move that was widely appreciated in public society and workers' unions. Since coming under government-ownership, the steel mills infrastructure and available capacity was restructured and expanded. In 2012, Ukraine announced to provide technological development and help in

2135-592: The disastrous effects on steel mills, and it was lost by the private sector due to their inability to run such giant large-scale operations of steel mills. Under the private sector, the steel mill suffered losses in its net worth and declining of production capacity. The Economic Coordination Committee (ECC) was forced to approved a bail out package after the private sector, the Tuwairqi Steel Mills pulled off its investment from steel mills and instead established another steel mill industry to compete against

2196-623: The elite club of iron and steel producing nations. The project was completed at a capital cost of Rs. 24.7Mn. The completion of the steel mill was formally launched by President General Zia-ul-Haq on 15 January 1985. Soviet scientist Dr. Mikhail Koltokof flew to Pakistan and settled in the country to provide training to Pakistan's technical staff. Engineer Niaz Muhammad and materials scientist Wahab Siddiqui received training in Soviet Russia and trained thousands of scientists and technical staff. Their inspirations and innovations led them to earn

2257-467: The general budget. The creation of a state-owned enterprise from other forms of public property is called corporatization . In Soviet-type economies , state property was the dominant form of industry as property. The state held a monopoly on land and natural resources, and enterprises operated under the legal framework of a nominally planned economy , and thus according to different criteria than enterprises in market and mixed economies. Nationalization

2318-497: The highest award from Pakistan, and also from the Soviet Union. The Government of Pakistan conferred them with Pride of Performance. Pakistan Steel Mills not only had to construct the main production units for 2.2 MTPY, 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 and 1985, with

2379-528: The idea of public sector provision of goods and services as inherently inefficient. In 1961, Murray Rothbard wrote: "Any reduction of the public sector, any shift of activities from the public to the private sphere, is a net moral and economic gain." American libertarians and anarcho-capitalists have also argued that the system by which the public sector is funded, namely taxation, is itself coercive and unjust . However, even notable small-government proponents have pushed back on this point of view, citing

2440-566: The leading business concerns in Saudi Arabia, also launched a $ 300 million steel mills project at Bin Qasim. The group will set up Tuwairqi Steel Mills (TSM), a state-of-the-art steel-making plant in the southern port city of Gawadar, Pakistan. The entire privatization programme of prime minister Shaukat Aziz came to a halt when the WATAN PARTY filed a petition under section 184 (3) through its Chairman Barrister Zafarullah Khan in

2501-420: The market value of Rs 945 billion as on 2006 investigation by potential bidders who withdrew from the bidding process for reasons not known. The completion of the steel mill was forced to stop due to liquidity crises and formally launched after 12 years by the then-President of Pakistan General Muhammad Zia-ul-Haq on 15 January 1985. Pakistan Steel today is the country's largest industrial undertaking, having

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2562-533: The means of production may be labelled state socialism . State ownership was recognized by Friedrich Engels in Socialism: Utopian and Scientific as, by itself, not doing away with capitalism, including the process of capital accumulation and structure of wage labor. Engels argued that state ownership of commercial industry would represent the final stage of capitalism, consisting of ownership and management of large-scale production and manufacture by

2623-454: The private sector, the government of Prime Minister Yousaf Raza Gillani activated the nationalization programme after accepting the recommendations, despite protests lodged by the Finance minister Abdul Hafeez Shaikh . In 2011, the steel mill was put under the management of government-ownership, expanded and re-structured. The board of directors would be restructured and expanded, from

2684-399: The property rights approach based on incomplete contracting (developed by Oliver Hart and his co-authors), ownership matters because it determines what happens in contingencies that were not considered in prevailing contracts. The work by Hart, Shleifer and Vishny (1997) is the leading application of the property rights approach to the question whether state ownership or private ownership

2745-543: The provisional authorities. Due to its importance, the steel mills followed strict environmental policies regulated by the Environmental Protection Agency (EPA) of the Ministry of Environment (MoE) . All health safety and healthy working environment is continuously regulated under a designed system. Pakistan Steel Mills, besides its core activities, has done a lot in making the environment in and around Pakistan Steel green and beautiful through

2806-521: The public good, then the party with the larger valuation of the public good should always be the owner, regardless of the parties' investment technologies. More recently, some authors have shown that the investment technology also matters in the Besley-Ghatak framework if an investing party is indispensable or if there are bargaining frictions between the government and the private party. Public sector The public sector , also called

2867-586: The public infrastructure. Rates of pay for public sector staff may be negotiated by employers and their staff or staff representatives such as trade unions . In some cases, for example in the United Kingdom, a pay review body is charged with making independent recommendations on rates of pay for groups of public sector staff. As of 2017, France had 5.6 million civil servants , amounting to 20% of all jobs in France. They are subdivided into three types:

2928-488: The public sector are either part of the private sector or voluntary sector . The private sector is composed of the economic sectors that are intended to earn a profit for the owners of the enterprise. The voluntary, civic, or social sector concerns a diverse array of non-profit organizations emphasizing civil society . In the United Kingdom, the term "wider public sector" is often used, referring to public sector organizations outside central government. The organization of

2989-491: The public sector can take several forms, including: A borderline form is as follows: Infrastructure includes areas that support both the public's members and the public sector itself. Streets and highways are used both by those who work for the public sector and also by the citizenry. The former, who are public employees, are also part of the citizenry. Public roads , bridges , tunnels , water supply , sewers , electrical grids and telecommunication networks are among

3050-547: The quarries of limestone and dolomite in the Makli and Jhimpir areas of Thatta district. It is one of the largest industrial complexes in Pakistan as well as in South Asia and due to its enormous expansion, the steel mill has its own educational facilities (see Pakistan Steel Cadet College and Pakistan Steel Institute of Technology), housing and residential programmes, parks and recreation facilities and police services apart from

3111-473: The requisite machinery and raw materials, plant site, domestic ore versus imported ore, ownership pattern, product mix and all foreign financing credit kept the project on hold for a considerable time. After 20 years of policy development and studies of PCSIR , President General Yahya Khan gave the approval of the recommendations of the state-owned scientific think tank, the Council of Scientific and Industrial Research . Bureaucrats and scientists agreed upon

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3172-541: The restoration of raw materials supply chain after viewing the performance of steel mills. The Ukrainian Ambassador quoted, "for major operational units of Pakistan Steel Mills is remarkable ". The Ambassador of Ukraine Volodymyr Lakomov said that Ukraine is keen to make a business relationship with Pakistan and the steel mill PSM will be a "symbol of friendship" between the two countries. State ownership In market-based economies, state-owned assets are often managed and operated as joint-stock corporations with

3233-463: The same day when a six-week time was mandatory to examine and fix a fair reference price for approval by the CCOP. PSM was deliberately destroyed by successive Governments to benefit the private sector Steel Mafia allegedly involved in more than $ 12 billion from 2005 to 2022 but persons at fault (beneficiaries & their facilitators in power corridors) remained unaccountable as yet. The privatization had

3294-484: The state's management policies, though these rights are not property rights as they are not transmissible. For example, if a family is allocated an apartment that is state owned, it will have been granted a tenancy of the apartment, which may be lifelong or inheritable, but the management and control rights are held by various government departments . There is a distinction to be made between state ownership and public property. The former may refer to assets operated by

3355-513: The state. Within the United Kingdom, public ownership is mostly associated with the Labour Party (a centre-left democratic socialist party), specifically due to the creation of Clause IV of the "Labour Party Manifesto" in 1918. "Clause IV" was written by Fabian Society member Sidney Webb . When ownership of a resource is vested in the state, or any branch of the state such as a local authority , individual use "rights" are based on

3416-527: The state. State ownership is advocated as a form of social ownership for practical concerns, with the state being seen as the obvious candidate for owning and operating the means of production. Proponents assume that the state, as the representative of the public interest , would manage resources and production for the benefit of the public. As a form of social ownership, state ownership may be contrasted with cooperatives and common ownership. Socialist theories and political ideologies that favor state ownership of

3477-410: The steel mill. Despite all its problems, the steel mills is a paradigmatic employer and would rather see itself run into the ground than mistreat its long standing employees. In the midst of all the troubles that it is facing, the mill started issuing letters confirming their jobs and started producing the heavy steel and iron materials. After leading to an infernally long protest and inability proved by

3538-499: The steel mills under the intensified programme, called the Privatization Programme . When the news reached the rest of the country, demonstrations and spontaneous protests began to take place against the government of Shaukat Aziz and sparked lengthy debates in parliament , which members of the opposition walked out of in disgust. The consortium involving Saudi Arabia -based Al Tuwairqi Group of Companies submitted

3599-536: Was laid on 30 December 1973 by Prime Minister Zulfiqar Ali Bhutto. The mammoth construction and erection work of the integrated steel mill, never experienced before in the country, was carried out by a consortium of Pakistan construction corporations under the supervision of Soviet and Pakistani experts. Khwaja Inayat Ullah was the Director of Operations & Chief Engineer of this project. (Blast furnace 1&2 & RMPP) The main production units were constructed with

3660-479: Was made to privatize the steel mills to global private ownership under the counter-measure Privatization Programme of Prime Minister Shaukat Aziz . However, these efforts were thwarted by the Supreme Court in Islamabad . In spite of its enormous size and expansion, only 18% of the corporation's capacity was in use, which prompted the PSMC to request a bailout plan of ₨. 12 billion to prevent its closure;

3721-540: Was the outcome of a process reflecting procedural irregularities, said the 80-page judgement in the PSM case. On 23 June, a nine-member bench of the Supreme Court had annulled the sale of the country's largest industrial unit to a three-party consortium and had directed the government to refer the matter to the Council of Common Interests (CCI) within six weeks. It had declared the $ 362 million transaction with

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