The Petroleum Division has prepared a summary to seek Prime Minister’s necessary approval regarding the effective change of control from ENI Pakistan to Prime International Oil and Gas Company Limited (PIOGCL).
According to sources, the Petroleum division is all set to finalize the sale of ENI Pakistan to PIOGCL without obtaining a full and firm commitment from HUBCO. They said that the Petroleum division has prepared a summary titled “Effective Change of Control from ENI Pakistan Limited (Companies) to Prime International Oil and Gas Company Limited (PIOGCL)” mainly to secure necessary approval of the premier. They said the Petroleum Division has obtained necessary input from concerned authorities especially, the finance division, federal board of revenue (FBR), securities exchange commission of Pakistan (SECP), Law and Justice Division etc. However, Additional Secretary Petroleum has raised serious concerns and asked the authorities concerned to circulate the summary to the Finance Division and Law & Justice Division for taking specific comments with regard to adequacy of the undertaking submitted by HUBCO to cover the obligations of PIOGCL with reference to work commitment and financial obligations including but not limited to decommissioning cost to be incurred upon expiry of lease and license. Further, the advice of the Securities Exchange Commission of Pakistan (SECP) should be obtained separately with regard to the matters concerning corporate governance and capability of PIOGCL in performing its obligations, said sources.
They added that the petroleum division is trying hard to finalize the deal for change of control of ENI Pakistan to PIOGCL.
Earlier, ENI Pakistan Limited had entered into sale purchase agreements (SPAs) dated 08-03-2021 with PIOGCL in respect of sale of the entire share capital and in order to effectuate the subject change of effective control/disposition of shares from M/s Eni to PIOGCL, M/s Eni requested the Government of Pakistan (GoP) for its consent under the applicable petroleum rules. And, following to this request of Eni Pakistan, Petroleum Division’s Directorate General of Petroleum Concession (DGPC) in a letter sent on April 1, 2022 to the managing director (MD) of Eni Pakistan Limited had asked to provide an undertaking of M/s HPHL in favour of PIOGCL that in case PIOGCL falls short of meeting its obligation/financing with regards to acquisition price of $16.4 Million and running of ENI Blocks operations in future ostensibly to make sure HUBCO will provide all such financial support to PIOGCL unconditionally including ENI Employee Group’s share.
According to sources, after a lapse of two months and six days, HUBCO has now provided a copy of an undertaking only to the extent that HPHL (Hub Power Holding Limited) is fully aware of and understands all the legal and contractual obligations undertaken by PIOGCL pertaining to the ENI transaction. And, HPHL will provide all reasonable support, including financial support to prime, including the EBO’s group share (50% shareholder in PIOGCL), in the event that PIOGCL is unable to meet its financial obligations regarding payment of the acquisition price ( i.e USD 8.2 Million ) necessary for the completion of the ENI transaction.
Sources were of the opinion that the Government of Pakistan (GoP) and the Ministry of Energy (Petroleum Division) should analyze the serious ramifications of approving such a dubious case of asset change and operatorship change from one company who is defaulting on its Liquefied Natural Gas (LNG) shipments to the country and further worsening the energy crisis in the country to another company with questionable liquidity, profitability, lack of operatorship experience.
They added the question that when a company cannot even fulfil obligations to the extent of acquiring the asset which has already been undervalued in the first place ($8 million), how will it run the operations of such huge gas fields which are the backbone of Pakistan.
It merits mentioning here that locally well-established and reputable E&P companies that have extensive experience of operatorship in the country and also possess a successful track record of managing reservoirs with a competent team of E&P professionals should be made partners in the new venture to move the transaction forward.