Progas Pakistan Limited, an LPG marketing company based in Karachi, is being sued by 10 financial institutions for recovery of about Rs 1.4 billion in addition to damages, according to court documents available with Business Recorder. These financial institutions have prayed the court to order forced sale of the company''s assets and shares.
The latest suit for recovery of Rs 1,399,374,159 along with liquidated damages, cost of fund charges, and costs has been filed under Section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, by nine financial institutions against Progas Pakistan Limited and Progas Holding Limited. Another lender filed recovery suit against Progas last year.
The plaintiffs have prayed for a "permanent injunction" against Progas from "selling, alienating, disposing of or creating third party right in any manner whatsoever in respect of hypothecated stocks, machinery and receivables including all present and current and fixed assets, etc and mortgaged properties and pledged shares in favour of the plaintiffs," according to the writ petition. The plaintiffs have also prayed the court to order the sale of all mortgaged properties, present and future moveable assets, and company shares.
The plaintiffs include Standard Chartered Bank, United Bank Limited, Askari Bank Limited, First Women Bank Limited, Bank Al-Habib Limited, Soneri Bank Limited, Bank of Punjab, Pak Libya Holding Company, and Silk Bank. Pak Oman Investment Company Limited filed its recovery suit no 317 of 2008 earlier for Rs 48 million.
According to court documents, the plaintiffs have stated that they allowed Progas a syndicated term finance facility of Rs 1,370,000,000 under an agreement dated January 29, 2004, and that Progas failed to pay instalments that were due on July 8, 2008, October 8, 2008, January 8, 2009, and April 8, 2009, despite various demands and reminders. Court documents state that the lenders have recalled the finance facility.
Lenders served on Progas a legal notice dated January 30, 2009, in reply to which Progas asked for 15 days to raise the required funds and settle the matter. Progas has "failed to settle their liabilities despite lapse of several months," state the court documents. Progas has "failed/refused/neglected to repay their outstanding liabilities," according to the recovery suit.
Progas has its own dedicated LPG import terminal situated at Port Qasim, Karachi, which was inaugurated by President Pervez Musharraf in May 2005. Progas has been at the forefront of the campaign for higher prices for locally-produced LPG in order to facilitate imports.
Despite the decision by the Shaukat Aziz government to link local LPG producer prices with international prices, Progas has had no share in LPG imports for at least one year, according to industry insiders. Earlier this year, the Private Power and Infrastructure Board (PPIB) scrapped, on account of default, a thermal power project of 305MW awarded to Progas in September 2008.
According to PPIB''s letter of February 28, 2009, Progas was "required to furnish the performance guarantee and non-refundable processing fee for issuance of the letter of support" but "failed to comply with such conditions and requirements." This correspondent made several attempts to obtain comments of the Company''s spokesman, Muhammad Ali, through email and telephone, but received no response.