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ISLAMABAD: Pakistan Steel Mills (PSM) is to pay Rs 93.2 million as settlement amount to M/s Ocean Wide Services for “violating” the contract due to weak financial position, sources close to Secretary Industries told Business Recorder.

Recently, Ministry of Industries and Production informed the ECC that Pakistan Steel Mills entered into a Contract of Affreightment (CoA) with M/s Ocean Wide Services for the transportation of coal from Canada and Australia in the year 2010. In terms of Clause-50 of the contract, the Letter of Credit (LC) was to be opened in the first instance in favour of beneficiary for 90% payment against the freight cargo of coal within seven working days of freight invoice. The remaining 10% freight LC was to be established after issuance of final adjustment sheet/settlement of demurrage, dispatch and other charges between applicant (PSM) and ship-owner. Due to a weak financial position, PSM was unable to pay 10% affreightment charges to M/s Ocean Wide shipping service.

Ministry of Industries and Production further contended that in order to resolve the issue, a meeting under the Chairmanship of Secretary, Finance Division was held on 13t11 July, 2020 in which it was decided that "the legal counsel for the M/s Ocean Wide and the Chairman PSM shall amicably work out details of the settlement plan for an out-of-court settlement. Moreover, the outstanding principal amount shall be duly reconciled by the two parties and accordingly the amount would be arranged for an early payment.

It was further decided that a summary would be submitted before the ECC after taking necessary steps.

Moreover, Finance Division while sharing their comments on this summary has agreed to release Rs.93.247 million to PSM as a loan under certain conditions. In light of the decisions made in the said meeting, a settlement agreement had been reached which was duly approved and signed by both the parties, i.e., M/s Ocean Wide and PSM, as full and final settlement. This agreement was expired on 31 December 2020 which was extended till 15th February 2021 with the consent of M/s Ocean Wide.

Ministry of Industries and Production requested the ECC to direct Finance Division to release an amount of $ 582,792.77 equivalent to Rs 93,246,843.2 (1USD=PKR 160).

Copyright Business Recorder, 2021