ISLAMABAD: Finance Minister, Senator Shaukat Tarin reportedly grilled Managing Director, Sui Southern Gas Company (SSGC) for delaying the issue of No Objection Certificate (NOC) to Pakistan Steel Mills Corporation (PSMC) to be submitted to SECP for approval of Scheme of Arrangement (SoA), sources close to Secretary Privatisation Commission told Business Recorder.
On February 16, 2022, during discussion on a reference moved by Privatisation Commission for resolution of pending issues relating to various transactions, Secretary PC highlighted that the issue of receipt of NOC from SSGC in favour of PSMC for the transfer of core operating assets to Steel Corp (Pvt) Ltd, as envisaged in the Scheme of Arrangement (SoA) filed by PSMC with the SECP in August 2021, besides withdrawal of litigation/ stay order by SSGC against PSMC, has been pending since long.
Secretary PC maintained that the CCoP in its meeting held on August 10, 2021 had directed the Petroleum and Finance Divisions to hold meetings with relevant stakeholders for resolution and settlement of SSGCL payables. It was also directed that subject to issuance of Letter of Comfort (LoC) by Finance Division, SSGC shall withdraw litigation/ stay orders against PSMC.
These decisions were ratified by the Federal Cabinet on August 17, 2021. Finance Division had issued LoC in this regard but it was conveyed by Petroleum Division that it is not acceptable to the SSGCL Board and the Board suggested alternate options for consideration.
Subsequently, Finance Division, through a letter of February 3, 2022 addressed to MD SSGC issued revised LoC, stating that “Finance Division is fully cognizant of SSGC receivables against Pakistan Steel Mills and assures to take all necessary steps for early and judicious settlement of liabilities by PSM to SSGC according to the following parameters: (i) PSM to repay principal amount of duly reconciled outstanding amount between PSM and the SSGC in annual instalments within a period of 10 years, starting after one year from the date of privatization; and(ii) Late Payment Surcharge (LPS) against the principal amount will be determined in accordance with the opinion of Law Division on the issue solicited by the Petroleum Division and Finance Division which shall extend all necessary support from an agreed settlement plan of the LPS among the PSM and the SSGC.”
However, SSGC, in a letter of February 14, 2022 sent the following response: (i) SSGC will appreciate if Finance Division endorses/ assures judicious settlement of SSGC outstanding receivables against PSMC as ‘Guarantor “;(ii) moreover, draft LoC shared by Ministry of Finance, the contingency plan must be included in case of non-payment by PSMC. MoF may include the option of transfer of PSMC land in favour of SSGC if the agreed payment plan is not rigorously followed by PSMC; and (iii) Comfort Letter must include payment plan of LPS either on the same terms mentioned in the LoC regarding principal payment or the amount of LPS can be adjusted against PSMC land which could be transferred to SSGC without any encumbrances. As per our understanding the ascertainment of LPS amount will; however, be based upon and subsequent to the opinion of the Law Division regarding applicable rate of LPS.
In order to resolve the issue, Secretary PC proposed that SSGC should consider amending its recovery suit/ claim by excluding the charge on the Core Operating Assets, i.e., steel plant & machinery and land measuring 1,229 acres envisaged to be transferred Steel Corp (Pvt) Ltd. Remaining land assets of the PSMC will be sufficient to cover the amount claimed by the SSGC. Advisor to PM on Commerce and Investment also endorsed the proposal.
Finance Minister took serious note of the situation and directed MD SSGC to apprise the Board of the proposal and issue the requisite NOC to be submitted to the SECP for approval of Scheme of Arrangement and also to remove the legal charge accordingly at the earliest.
Copyright Business Recorder, 2022