However, upon the Ministry of Finance (MoF) instructions, the following changes were made in NBP's revised offer letter of October 20, 2011, which was also accepted by Acting CEO of PSM.

A brief comparison of the two term sheets is as follows: profit/mark-up rate, actual 6k + 1.95% p.a., revised 6k + 1.75% pa; advisory/arrangement/rescheduling fee, actual 1.50% (one time), revised 0.40% (one time); agency fee, actual Rs.1.50 million p.a., revised nil; trustee fee actual Rs.1.50 million p.a., revised nil; legal fees, revised capped up to maximum of Rs.500,000; and out of pocket expenses, revised capped up to maximum of Rs.500,000.

According to the documents the condition for having budgetary allocation by GoP for servicing of instalment payments of debt was also removed.

NBP, in its letter has reiterated that the terms and conditions for the loan was approved by the Acting CEO of Pakistan Steel Mills based on which a firm internal approval was obtained from NBP's competent authorities. Disbursement has already been made in this facility which currently stands at Rs. 6.907 billion and NBP has been accruing mark-up income on the basis of approved pricing and any change in the pricing of this facility will have a negative effect on the Bank's P&L.

"We inform you that prompt payment bonus of 0.75% cannot be applied on this facility which was disbursed in January 2011 and the same is not acceptable to NBP," said Syed Rukunuddin Khawar, team leader of NBP, in the letter to PSM General Manager, Co-ordination/Finance.

According to him, as far as downward revision of the rescheduling fee from 0.40% to 0.20% is concerned, the bank's stance is same ie that since the bank has already accrued this income based on an approved term sheet (revised downwards from 1.50% to 0.40%), the same cannot be further revised.

PSM has been advised to convey NBP's stance to the MoF while appreciating the fact that the desired changes cannot be made now ie after a lapse of more than 10 months from the first drawdown under the subject facility.  Now, with regard to the insertion of 0.75% prompt payment bonus for timely payment of instalment at a pricing of 6 month + 1.75% pa, as per request of the MoF the required clause has been inserted into the indicative term sheet for Rs 6.0 billion long term loan facility. Further, the advisory and arrangement fee has also been revised downward from 0.40% to 0.20%. -MUSHTAQ GHUMMAN