The National Bank of Pakistan (NBP) is reported to have extended a commercial credit facility of Rs3 billion to Pakistan Steel Mills (PSM), enabling it to open more Letters of Credit (L/Cs) for importing raw material. Sources told Business Recorder on Thursday that Finance Minister Saleem Mandviwala played a vital role in the resolution of this issue between PSM and NBP just after taking charge of his portfolio, removing hurdles obstructing PSM””s revival.
Since 2009, NBP has been providing a line of credit worth Rs3 billion to PSM every year to import raw material. The facility was provided solely on commercial basis without any government guarantee. However, during the past calendar year, PSM did not utilise this facility, which expired on December 31 last year. After that, the NBP was reluctant to extend this credit facility and the country””s largest steel production plant found it difficult to arrange funds for retiring this facility. For the past few weeks, the CEO of PSM, Maj-Gen Muhammad Javed (retired) was trying to restore this facility. He had also approached the finance ministry to arrange funds for importing raw material.
It is learnt that the CEO managed to arrange a meeting in Islamabad on February 19 this year, which was chaired by Finance Minister Saleem Mandivwala and also attended by President of NBP Asif Brohi. During the meeting, the issue of reviving this credit facility was discussed in detail and finally NBP agreed to restore this facility on the recommendation of the Finance Minster Finance. PSM has already awarded several iron ore tenders to international firms, but it was unable to open L/Cs because of the unavailability of funds.
CEO of PSM Maj-Gen Muhammad Javed (Retired) said: “Restoration of the credit facility and arrival of raw material will support PSM to increase its production to 30 percent by the end of March this year.” He said that a ship carrying 55,000 tons of iron ore arrived at Port Qasim on Thursday, adding that other deals would mature with the help of the NBP credit facility. Shortage of raw material, he said, had critically affected the steel mill””s production, resulting in losses amounting to billions of rupees every month.
“We have already finalised deals for the import of 150,000 tons of iron ore from various countries and with the restoration of the NBP credit facility, PSM will be able to open L/Cs for these contracts,” he said. Pakistan Steel has already secured a long-term agreement for coal supply and it also initiated steps to ensure a constant supply of iron, enabling it to increase production, the CEO said.