Pakistan Steel Mills (PSM) is to pay Rs 93.2 million to M/s Ocean Wide Services as settlement sum for “violating” the contract due to poor financial position, Company Recorder told sources close to Secretary Industries.
Pakistan Steel Mills signed a Contract of Affreightment (CoA) with M/s Ocean Wide Services for the transportation of coal from Canada and Australia in 2010, according to the Ministry of Industries and Development. With regard to Clause-50 of the contract, the Letter of Credit (LC) was to be opened, in the first case, in favor of the receiver of a payment of 90% against the freight of coal within seven working days of the invoice of the freight. After the issuance of the final adjustment sheet/settlement of demurrage, dispatch, and other charges between the applicant (PSM) and the ship-owner, the remaining 10% freight LC was to be created. PSM was unable to pay 10% affreightment charges to M/s Ocean Wide shipping service due to a financial crisis.
Furthermore, the Ministry of Industry and Production argued that a meeting was held on 13th11 July 2020 under the Chairmanship of the Secretary of the Finance Division in order to resolve the dispute, in which it was agreed that’ the legal counsel for the M/s Ocean Broad and the Chairman of the PSM would amicably work out the details of the out-of-court settlement plan. In addition, the outstanding principal sum will be properly reconciled by the two parties and an early payment will be negotiated accordingly.
It was also determined that, after taking the requisite steps, a report would be submitted before the ECC.
In addition, when reflecting on this overview, the Finance Division agreed to release Rs.93,247 million to PSM as a loan under certain conditions. A settlement agreement was reached in the light of the decisions taken at the said conference, properly accepted and signed by all parties, i.e. M/s Ocean Wide and PSM, as a complete and final settlement. This deal was due to expire on December 31, 2020, but M/s Ocean Wide agreed to extend it until February 15, 2021.
The Ministry of Industry and Production demanded a sum of $ 582,792.77 equal to Rs 93,246,843.2 (1USD=PKR 160) to be released by the ECC to direct the Finance Division.