Ispat Group urged to put more funds into Global Steel

Trade and Industry Secretary Peter B. Favila is urging the Ispat Group to put in more funds into Global Steel International (formerly National Steel Corp.) instead of still trying to get the government to extend a sovereign guaranty for GSI’s $20-million loan from international creditor banks.

The $20 million is supposed to fund GSI’s raw material imports.

The request for a guaranty from the Philippine Export-Import Credit Agency by GSI has not been denied even though the original request during the time of former Trade Secretary Cesar V. Purisima had also not been favorably endorsed by Purisima.

Favila, in a press conference Thursday last week, reiterated his continued opposition to grant of a sovereign guaranty for GSI’s loans because of its possible impact on the Philippine’s debt burden should GSI default on the loan.

"Why don’t they just put in more funds?" Favila asked. Philexim was suppose to hire technical experts either from the University of the Philippines or Mapua to conduct an assessment of GSI’s operations and production capability.

Securing an independent and competent technical assessment of GSl’s operations and production capability would help the Philexim Board decide on whether to approve or disapprove the request of the Indian-owned steel firm to secure a sovereign guaranty for a $20- million loan it is seeking from foreign creditors.

GSl has repeatedly announced that it is now in commercial operation.

However, the Board of Investments (BOI) doubts GSI’s claim and has proposed the independent technical assessment.

Extending a sovereign guarantee poses a risk to the National Government (NG) because in the event of a default by Global SteeI, the loan would become the obligation of the Philippine government.