PSM - dead but bleeding

Pakistan Steel Mills (PSM) has been dead since June 2015, when the furnaces closed after gas was shut off due to non-payment of dues. Yet, 11 years later, the state remains in denial and refuses to give the mill a dignified funeral. In its life, the mill was the epitome of a white elephant - apart from a few years in the mid-2000s, the mill lost money every year of its five-decade operational history. But even in death, it continues to burn taxpayer money. According to the Ministry of Industries, the closed mill haemorrhaged Rs79.3 billion over the past three fiscal years alone, with Rs24 billion lost in FY26. About 72% of the losses since FY24 were interest payments on legacy debt, which will continue to accumulate since the government is unwilling to pay to clear it, and buyers are not particularly interested in operating the mill. The finance ministry has also not helped the situation, as it has failed to follow its own internal advice to restructure PSM's debt through swaps and write-downs. Meanwhile, 'running' costs also painfully hit the exchequer, including salaries, utilities and pensions. Part of the problem is that the governments in Islamabad and Karachi continue to live in a fool's paradise, believing that PSM can be revived into a profitable entity. The fact is that the cost of modernising and reactivating the mill while covering running and historical expenses makes this proposal a non-starter for most reputable investors. Even the current proposals, including one from Russia, are problematic due to Western sanctions. Public-private partnerships also risk sticking the government with the bill when they invariably fail. And even at its peak, PSM never produced a superior product - it relied on tariffs to make imported steel expensive and keep its own uncompetitive products profitable. The best-case scenario at this point is thus not revival, but liquidation. Part-selling the real estate and scrapping the mill could probably cover most liabilities and still leave the government with a small profit. Maintaining the status quo, however, is just an insult to everyone.