LAHORE: A bourse notification filed Monday by Hascol Petroleum Limited (HPL) announced it reached an out of court settlement with Mena Energy DMCC and will pay four $2.375 million instalments each over a course of 18 months.
In a board meeting held on 29th January, it approved an out of court settlement based on advice of HPL’s solicitors and senior counsel representing them in the litigation at the English Commercial Court with Mena Energy DMCC.
The notification read “The settlement involves the Company agreeing, subject to State Bank of Pakistan’s approval, to pay the settlement amount over a period of 18 (eighteen months in installments of US$2,375,000 each on 19th May 2018, 19th July 2018, 19th January 2019 and 19 July 2019.”
For the year 2017, HPL has made a general provision of around Rs600 million which will substantially minimize any adverse impact of the settlement arrangement and doesn’t expect any cash-flow issues for its ongoing business requirements, read the notification.
The dispute related to transactions for the sale of fuel oil and gasoil (diesel)by MENA to Hascol in Pakistan, for shipment in November/ December 2014, when there was a sharp decline in oil prices. Hascol defaulted on its performance obligations under the contracts.
But in a press release dated 30th of May 2017, MENA Energy DMCC said on 16 February 2017, the England and Wales High Court ruled that MENA Energy was entitled for damages from Hascol Petroleum concerning two shipments of fuel oil and one shipment of gas oil to Karachi in November 2014.
Counterclaims bought forward by Hascol Petroleum had been dismissed. They also mentioned that despite the ruling of the England and Wales High Court of Justice, reports that there was no case underway between MENA Energy and Hascol Petroleum or that Hascol Petroleum was entitled for damages had been considered false.
Hascol Petroleum Limited engages in the procurement, storage, and marketing of petroleum and related products in Pakistan. Its petroleum products include fuel oils, diesel, gasoline, jet fuel, and liquefied petroleum gas products and is the country’s second largest oil marketing company after Pakistan State Oil (PSO) with a 11 percent market share.
HPL shares were trading at Rs281.10, down Rs0.99 and KSE-100 index closed at 44,457.30 points, down 93.83 points at close on Monday.