Pakistan: Reconnecting with Russia

Pitching for a new chapter in their relations, Pakistan and Russia have signed important Memoranda of Understanding (MoUs) in Islamabad to improve the state of things in three areas that have so far not only burdened the national exchequer but have been the cause of social and economic upheavals in Pakistan. The reference is to Pakistan Steel Mills, Pakistan Railways and the energy crisis of Pakistan. Each one of these has by now assumed breakdown proportions due to mismanagement and lack of political will to make right and timely decisions. The best part of the renewed Pak-Russia relations is the reaching out of Russia to make things workable for Pakistan in areas that have rendered the country unmanageable. Now it is on Pakistan to respond and get down to work with its giant neighbour to the north. Russia has promised to modernise, reconstruct and expand the Pakistan Steel Mills (PSM). So far PSM has suffered a cumulative loss of Rs 71.4 billion over the last four years. PSM is operating at only 14 percent of its capacity. Usually taken as a white elephant because of its drain on the national exchequer and its inability to generate profits, the decision to hand over the upgrading project to Russia carries two benefits: one, the the fact that Russia originally built PSM; second, they have the required technical know how to resurrect the project. For Pakistan Railways, another sore amongst Pakistan’s state-owned enterprises and running into an annual loss of Rs 96 billion, Russia would contribute in two areas. It will enter into a joint venture and develop a carriages workshop in Pakistan, or supply the extra demand from Russia. In this regard, a better option would be to upgrade the existing railways manufacturing facilities in Pakistan. An immediate focus on the carriage manufacturing unit in Islamabad and the locomotive manufacturing facility in Risalpur could turn things around with significant job creation and revenue generation. Pakistan Railways (PR) is a tale of the descent into complete chaos, with 55 percent overage tracks, 70 percent freight wagons running at low capacity, and out of 520 only 76 locomotives in operational condition. Things are so bad in PR that people avoid using the railroad for fear of sudden breakdowns, unreliable departure and arrival schedules, and shabby infrastructure both at the stations and on board. In order to improve things, PR needs to look at its virtually defunct freight operations, since the bulk of its revenue could be generated from this source. On the energy front, the Russians have extended cooperation in converting the Jamshoro and Muzaffarabad thermal power plants from furnace oil to coal. What would be a better idea than the coal underground gasification project still in its nascent stage after a decade into it, is digging the coal out and using it for energy generation. Russia could also help us in reviving depleted or dormant gas wells. And why not accept Russia’s proposal to grant it the Iran-Pakistan gas pipeline project without an international tendering process. Will not Russia expose itself to greater hostility from the US by going into this project? And what makes us think that any country would bid for the project under the prevailing circumstances? Financially, Pakistan is surviving on the edge. We need to make some tough and urgent policy decisions to get through this difficult economic spell. Russia’s Foreign Minister Sergey Vikorovich is due in Pakistan today. His trip is being taken as a substitute for Putin’s cancelled trip to Pakistan. Now it is our turn to address Russia’s concerns and move on from the desired security and political association to an economic cooperation relationship without wasting any more time.