Securing an independent and competent technical assessment of Global Steel’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. Global Steel has repeatedly announced that it is now in commercial operation.
However, the Board of Investments (BOI) doubts Global’s claim and has proposed the independent technical assessment.
Previously, former Trade and Industry Secretary Cesar V. Purisima had opposed the grant of a guaranty and just like his predecessors, Trade and Industry Secretary Peter B. Favila has said that he would not endorse the extension of a sovereign guarantee for a $20-million loan that Global Steel is seeking for its raw material import requirement.
Extending a sovereign guarantee poses a risk to the National Government because in the event of a default by Global SteeI, the loan would become the obligation of the government.
Global Steel’s attempt to secure a sovereign guarantee appears to be the opposite of its promise to bring fresh funds, sources said.
Instead, sources said Global SteeI appears to be tapping resources that the National Government should otherwise tap for itself.