State-owned Pakistan Steel Mills (PSM) has been able to open two letters of credit (L/Cs) for the purchase of 0.11 million metric tons of coal.

The L/Cs were opened on the release of the first tranche of a bailout package provided by Pakistan's government for the country's largest industrial entity.

Raw materials

The mill is currently in dire need of raw materials, including coal and iron ore for steel production.

The L/Cs primed by the government's funds should allow the steelmaker to obtain its immediate requirements in this respect.

Losses

National Bank of Pakistan has established the credit line for the purchase of two shipments of coal from Australia and Canada of 55,000 metric tons each.

In the fiscal year 2011-12, PSM suffered losses of US$227 million while the mill's accumulated losses have now reached US$754 million.

Government support

Bailouts have been a regular feature in the history of PSM, which has also gained a reputation according to local media for corruption and mismanagement.

The first tranche in the current bailout was a US$40 million instalment. The government has currently approved a total of US$158 million of bailout funds for the state-owned steelmaker.

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