One of Pakistan's opposition parties is calling on the government to provide financial assistance to Pakistan Steel Mills (PSM).

The Watan Party has taken its case to the Supreme Court of Pakistan in a petition that explains how the steel mill's financial situation is preventing banks from providing it with the letters of credit (L/Cs) it needs.

Shutdown fears

The petition to the court maintains that the state-owned steel firm is on the verge of a complete shutdown due to a shortage of the iron ore it needs as a basic raw material.

Documents submitted to the court also explain that the mill has been badly impacted by the financial crisis.

L/C regulations

One of the reasons why PSM cannot purchase iron ore is that commercial banks will not provide it with the L/Cs it needs.

The banks cannot open L/Cs under State Bank of Pakistan rules, because the PSM's total equity is now at an insufficient level according to the petition.

The petitioners maintain that if the government fails to provide the financial support the mill needs to keep operating, the entire plant may collapse.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.