OGDC board refuses to sign GDRs plan sans guarantee

The government has suffered a serous setback as the Oil and Gas Development Company (OGDC) board declined to endorse the global depository receipts (GDRs) plan without state indemnification to protect the company from any possible legal action from the stakeholders.
The OGDC board, which met here the other day categorically told Privatisation Commission (PC) Representative Shahid Akbar that it wants an indemnification from the federal government before endorsing the listing of OGDC at the London Stock Exchange for GDRs offering to ensure that the company authorities do not face any legal action from any stakeholders in the case the information provided in the offer document proves incorrect or insufficient and has negative impact on GDRs value.
It referred the international stocks law that provides a leverage to the shareholders to sue the directors of the company that offers shares such as GDRs and at any stage they come to know that the information given inadvertently or otherwise proves incomplete or incorrect.
The board also raised the question as to why the OGDC should provide guarantee to GDRs offering when its sole beneficiary was the Government of Pakistan. This is a question, which is haunting the Privatisation Commission at different forums, and it has no option but refer to the privatisation laws that clarifies all proceeds of the divested public institutions will go to the federal government for debt-retirement and uplift of the social sector.
Journalists had also questioned Privatisation Minister Zahid Hamid during a kick-off meeting on GDRs, and asked him that what benefit of GDRs will go to OGDC. He could not give any clear answer except referring to the same old argument: the OGDC is a public sector company and it is run by an independent board. Its GDRs is a typical question and the government will have to address the issue of benefit of the offer.
Talking to Business Recorder, a privy to the meeting said the board was of the view that since the government was the sole beneficiary of GDRs how the OGDC could be a guarantor for the offering. The absence of financial adviser, who represents the finance ministry from the board surprised the members.
Sources said the FA is the right to respond to the board on the issue of guarantee and issuance of indemnification and his absence could delay GDRs floating. Sources said the board was also not satisfied over the documentation of the offering. It referred the data and other information given in the document to the auditor Taseer Hadi & Company for scrutiny.