Salaries & procurement of raw material: MoF likely to release Rs 2.87 billion to PSM

The Ministry of Finance is likely to release Rs 2.87 billion under the Financial Restructuring Package to Pakistan Steel Mills (PSM) within a week for salaries and procurement of raw material. Sources told Business Recorder on Thursday that the third tranche of approved financial restructuring package for the country's largest steel producing plant is scheduled to pay this month and the management is making efforts for timely release of this tranche.
The Ministry of Finance (MoF) has already released Rs 6.75 billion to the PSM during THE last two months for the smooth operation and payment of salaries. Some Rs 4.2 billion were paid to the PSM in May and Rs 2.55 billion in June this year. Sources said that the MoF is likely to release the third tranche amounting Rs 2.875 billion of bailout package within a week. This will be utilised for the payment of salary for the month of May and utility bills, besides the procurement of raw material.
"The payment of the third tranche is in process and the PSM is expected to get Rs 2.87 billion within next few days," an official said. The third tranche will have Rs 1.375 billion of cash injection, while the remaining Rs 1.5 billion will be paid to National Bank of Pakistan (NBP) for opening the Letter of Credit (LC) for the import of raw material, he informed.
"Some Rs 750 million will be utilised for the payment of one month salary, Rs 425 million for Utility Bills including water, power, gas and oil, Rs 100 million for gratuity and an amount of Rs 100 million for capital repair of the plant," sources said and added that another or the fourth tranche of Rs 2.875 billion is due in August, 2014. Presently, the country's largest steel manufacturing plant is facing acquit shortage of raw material and coal stocks are almost vanished, while iron ore stocks are for few weeks only.
One ship namely "Mega Ocean" carrying some 55,000 tons coal for the PSM arrived at Port Qasim on Thursday evening. This coal has been imported from Australia under long-term agreement and offloading is likely to start today. Another consignment of 55,000 ton coal is expected to reach in next three-four days. In addition, a shipment of manganese ore is also scheduled to reach this month.
As per business plan of financial restructuring package, submitted by the newly appointed Chief Executive Officer (CEO) Major General Zaheer Ahmed and accordingly approved by the Economic Co-ordination Committee of the cabinet, the mill is required to run at 20 per cent production capacity in July 2014, instead of some 5 per cent presently.
It may be mentioned here that the ECC in it meeting held in April this year approved a Financial Restructuring Package or Bailout Package amounting Rs 18.5 billion for the state owned country's largest steel producing plant for its revival. The PSM for the last few years have faced billions of rupees losses due to mismanagement and incompetent leadership. Monthly losses of the mills stood about Rs 1.5 billion and overall debt and liabilities of the PSM have reached over Rs 100 billion.