Payment to ICIOC (Iran) without getting iron ore: PSM CEO and CFO lock horns
January 24, 2013
Chief Executive Officer (CEO), PSM, Major General Muhammad Javed (retired) and the Chief Financial Officer (CFO) have reportedly locked horns over payment of $15 million to ICIOC (Iran) without getting the required iron ore, well-informed sources in PSM told Business Recorder from Karachi.
The sources said Finance Minister Dr Abdul Hafeez Shaikh presided over a meeting on supply of wheat to Iran on January 11, 2013 and expressed serious concern over the delay in the execution of the agreement. The sources said the meeting decided that Passco will sell wheat worth $15 million to Iran to offset PSM”s pending payables to IC1OC (Iran) and PSM has been directed to pay in rupees to Passco equivalent to $15 million without getting iron ore in return.
According to sources, the CEO maintains that CFO PSM had created an awkward financial situation by stating before the Finance Minister that PSM can pay for the iron ore requirement as stipulated in the indicated capacity utilisation targets by the ECC. “The CFO statement has led to an impossible situation as PSM has little cushion to cater for sustained supply of iron ore and coal,” the sources quoted the CFO as saying.
Javed maintained that as it was suggested in an earlier letter by PSM, Passco should send wheat worth $15 million to get iron ore for PSM which, after manufacturing and selling the completed product, pay off Passco in a triangular arrangement. Previous debt equal to almost $15 million was proposed to be retired to the tune of 10 percent with each shipment of iron ore from Iran.
PSM is not in a position to pay $15 million to Passco against existing debt due to financial constraints. Managing Director Passco argued that he needed clarity on the mode of payment of transaction, transportation cost, cost differential and formal permission to proceed further from the Ministry of National Food Security & Research. He further revealed that 900,000 tons would be sold through private sector and there would be fewer problems.