The Petroleum Division has reportedly floated a proposal for divestment of 10 percent government shareholding in Oil and Gas Development Company Limited (OGDCL) to a strategic investor instead of 7 percent, sources close to the privatisation minister told Business Recorder.
However, Minister for Planning, Development and Special Initiatives Asad Umar and Prime Minister's Advisor on Commerce, Industries and Production, Abdul Razak Dawood have opposed divestment of up to 7 percent shares of the OGDCL, saying this is not the proper time.
Sharing the details, sources said, on February 25, 2020, Privatisation Division informed the Cabinet Committee on Privatisation (CCoP) presided over by Advisor Finance Dr Abdul Hafeez Shaikh, that this forum on August 8, 2019, directed Privatisation Commission (PC) to select 10 PSEs from privatisation list of already approved entities on October 31, 2018.
The PC, Board in its meeting held on August 26, 2019 approved 10 PSEs for inclusion in active privatisation list, which included the OGDCL. Against the press advertisement, three interested parties submitted Expression of Interests (EoIs) to act as the financial advisor (FA) for the transaction.
All three interested parties qualified for issuance of Request For Proposal (RFP). Later, on the basis of technical proposals consortium of (i) Credit Suisse, Arif Habib Limited and AKD Securities stood as the top-ranked interested parties.
The CCoP was informed that the FASA was under negotiation with the top-ranked interested party. Meanwhile, the Petroleum Division has asked that the recent share value of the OGDC is far below the earlier offered price of Rs 216 in 2014.
They have expressed that being the administrative ministry of the OGDCL, they feel it incumbent to request that the PC may review the ongoing process and not resort to selling the GoPs' 7 per cent share in OGDCL at this stage.
The Privatisation Division submitted the following proposals of the Petroleum Division to the CCoP for consideration and guidance ; (i) given the current price of OGDC's share, which is being traded at very low value, the ongoing divestment of GoP's 7 per cent share in the OGDCL may not be processed at this stage and; (ii) the PC may consider that the transaction should be structured in a manner that instead of 7 per cent GoP's shareholding in OGDCL, GoP's 10 per cent shares in it, may be offered to a strategic investor company preferably a well versed in oil and gas sector exploration and development (E&P) company, which would bring best industry practices and knowledge, state-of-the-art exploration and production technique in the larger interest of the OGDCL and the E&P sector in Pakistan.
During the ensuing discussion, Minister for Planning, Development and Special Initiatives observed that time was not appropriate for sale of shares of the OGDCL as it would not fetch desired result because of current share value of OGDCL.
Advisor to the Prime Minister on Commerce, Industries and Production and Investment endorsed the views of Asad Umar. After detailed discussion, the CCoP directed the Privatisation Division to deliberate on the proposals of the Petroleum Division in consultation with the concerned stakeholders in a holistic manner and submit a report thereon with viable recommendations to the CCoP in its next meeting for consideration. The federal cabinet is expected to endorse the proposal of the Petroleum Division on Tuesday (March 3).
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