Hascol issues financial results for 2020, restates 2018 and 2019 results: Sir Alan Duncan appointed chairman of Hascol

KARACHI: Hascol Petroleum Limited, HPL, has issued its financial statements for the calendar year ending 31 December 2020 (CY20), simultaneously restating financial statements for CY19 and CY18.

Recent years have been challenging for the global petroleum industry due to extreme volatility in international oil prices and demand shocks. Pakistan's petroleum sector also had to contend with large foreign exchange risk.

In 2020, to support the company through this difficult period, Vitol, Hascol's major shareholder, increased its equity stake from 25% to 40%. In an effort to turn Hascol around and get it back on track to profitability, a new Chairman and CEO were appointed in 2020. Much of the management was replaced and the Board was reconstituted.

Former UK Minister Sir Alan Duncan was appointed Chairman, replacing Mumtaz Hasan Khan. The then CEO, Saleem Butt, was replaced in 2020. Sir Alan and the new management have been working tirelessly in coordination with the Board to restore Hascol to profitability.

The Board has focused on controlling and reducing the operating costs, managing oil price and foreign exchange risk and controlling credit in the market. Rigorous systems and risk management protocols have been adopted to raise the quality of operations and ensure that best practices are adhered to in all of the company's processes.

The collapse in demand caused by COVID-19 hit Hascol very hard. As a result in 2021 the company entered into negotiations with its banks to comprehensively restructure and refinance its liabilities, appointing leading global advisors, Alvarez & Marsal, to advise on the restructuring. The Company has been negotiating with major banks on the restructuring in close coordination with the Board. "An agreement is expected soon towards restructuring of Hascol's bank debt to long-term debt.

This would coincide with additional equity being injected and the liquidation of Hascol's non-core assets", said Sir Alan Duncan, Chairman, Hascol Petroleum Limited. The restructuring is aimed to provide the company the required liquidity to reach its potential and ensure that liabilities are managed and paid down over a reasonable time period, thus restoring investor confidence.

Despite bearing equity losses and uncertainty, Vitol has continued to support Hascol through this turbulent period, on the understanding that HPL's other significant stakeholders especially the banks will restructure the company's liabilities.

The company discovered inaccurate entries in its 2019 accounts and immediately reported these to its national regulators. It is subsequently restating its results from 2018 through 2020; the restated accounts show that Hascol posted a loss of PKR 25 billion for CY20, a loss of PKR 35.2 billion for CY19, and a loss of PKR 3.4 billion for CY18.

The Company has taken a conservative view in the accounts about provisions, while the verification of certain historic book entries is undertaken. Until a full reconciliation effort is completed, and third party records are proved consistent, appropriate adjustments cannot be made.

Copyright Business Recorder, 2021