PSM to pay NBP’s debt by transferring assets

Aftab Ahmed

The government has approved an option of transferring assets of Pakistan Steel Mills (PSM) to offset the liability of the National Bank of Pakistan (NBP).

Ministry of Industries and Production had submitted a plan to the government for approval to pay off the debt of the National Bank of Pakistan (NBP) against the Pakistan Steel Mills.

In order to vacate hypothecation charge National Bank of Pakistan created on PSM’s present and future current assets, ministry of industries and production had sought a government guarantee on the NBP’s default L/C facility of Rs 2.25 billion till the date of guarantee government of Pakistan executed on the minimum interest rate.

It proposed that Pakistan Steel Mill will enter into a negotiation with NBP for settlement and restructuring of the finance facilities within 60 days.

PSM will utilize the mutually agreed portion of income arising out of the subsidiary operations and transfer of assets to offset the liability of the NBP.

In case of failure of any subsequent payments by PSM as a result of restructuring, ministry further proposed to pay due installments of NBP from the budgetary allocations as per past practice. Adopted in case of PSM syndicated finance facility, National Bank of Pakistan (NBP) has requested to make in such eventuality budgetary allocation and provision in the annual budget.

The government has considered the option submitted by the Ministry of Industries and production and approved the proposal.