Sale of convertible bonds of OGDCL: Finance concerned at appointment of adviser

Ministry of Finance expressed serious concerns over appointment of Nomura UK as the financial adviser for the sale of convertible and exchangeable bonds of state owned entity Oil and Gas Development Corporation Limited (OGDCL), sources in the Privatisation Commission disclosed.
They maintained that awarding the contract to an investment and financial group Nomura without following due process of tendering and bidding is a violation of privatisation policy of the government. During his visit to UK recently, Federal Minister for Privatisation Senator Waqar Ahmed Khan met the investment and financial groups that included HSBC, Nomura UK and London Stock Exchange who showed a keen interest in the current plans for the issuance of Equity Linked Instruments, ie Convertible and Exchangeable Bonds for State Owned Entities.
However, sources said that the Minister opted for Nomura as financial adviser for the sale of convertible bonds of OGDCL. The offer of equity linked instruments to Nomura UK has been granted without calling international tender or bidding, sources maintained.
During his press talk on March 7, 2010, the Minister said the country planned to raise as much as $500 million by selling Oil and Gas Development''''''''s convertible bonds by June 2010, which did not materialise. He also hinted at the appointment of Nomura as the financial adviser for the sale if no other company entered a bid.
Nomura set up a fund unit in Malaysia last year to offer services to Muslim investors world-wide. The group was awarded a stock broking license in the Southeast Asian country in 2009 and has banking operations in Qatar, Bahrain, Dubai and Saudi Arabia.
This is the second attempt by the government to sell three-year convertible bonds after a similar move in 2008 was abandoned because of general elections in the country and a volatile global economic situation. Earlier, government received proposals from 10 investment banks, including Citigroup Inc, Morgan Stanley, J.P. Morgan Chase & Co, Credit Suisse Group AG, Barclays Plc, Merrill Lynch & Co, Royal Bank of Scotland Plc and Nomura International Plc to advise on the bond sale.
In 2010-11, government decided to float convertible bonds of Oil and Gas Development Corporation, Pakistan State Oil and Pakistan Petroleum Limited in an effort to eliminate the circular debt. In a recent interview to Business Recorder, the Minister said that foreign investors were keen to invest in exploration.
He mentioned that the Privatisation Commission was facing some hurdles but expressed the hope that the proposal to off-load convertible bonds of oil sector will materialise soon. Through this plan, Privatisation Commission hopes to strengthen the financial balance sheet and bring the assets of OGDCL, PSO and PPL to around Rs 200 billion. The minister could not be reached for his comments.