The Economic Co-ordination Committee (ECC) of the Cabinet, which is scheduled to meet on January 12, 2010, will approve a bailout package of Rs 10 billion for the financially strapped Pakistan Steel Mills (PSM), sources close to Industries Minister told Business Recorder.
The Federal Investigation Agency (FIA) is currently investigating allegations of serious financial irregularities in PSM on the instruction of Supreme Court despite removal of Tariq Khosa who is now Secretary Narcotics Division.
Sources said that PSM's financial position was discussed in a meeting on May 28, 2009 in Karachi and it was decided/approved that: (i) Consortium loan of Rs 8 billion and running finance facility of Rs 2 billion be arranged through National Bank of Pakistan, with GoP guarantee; (ii) Rs 2.2 billion receivable from sales tax department be paid to Pakistan Steel immediately; (iii) in view of market fluctuation and loss of Rs 19 billion suffered through procurement and sales price variation spot procurement may be resorted to, and (iv) the payment of mark-up on subordinated loan be made by GoP up to June 30, 2009.
Sources said that in pursuance of these proposals, Finance Division has conveyed approval of a financial package to Pakistan Steel Mills to overcome its financial crisis which consists of syndicated terms finance facility of Rs 8000 million, and running finance facility of Rs 2000 million.
However, the Ministry of Finance has conveyed that the GoP guarantee would be arranged subsequently on approval by ECC, to be initiated by the Ministry of Industries and Production. Sources said that in view of Finance Division's advice, Industries Ministry is to submit a summary to the ECC for the following package, which would facilitate functioning of the PSM towards profitability.
Term loan facility of Rs 8 billion will be for 5 years in favour of Pakistan Steel based on GoP guarantee by consortium of banks led by NBP and running finance facility of Rs 2.00 billion, renewable on yearly basis. An official of the Industries Ministry told this scribe that the incumbent Minister Hazar Khan Bijarani is keen to bring out the PSM from financial crisis as the strategic asset of the country.