The Board of Management of Pakistan State Oil (PSO) has approved a financing arrangement to provide Rs 3.15 billion or its equivalent in USD to Pakistan Refinery Limited (PRL) for its Front-End Engineering Design (FEED) cost.
According to a resolution passed by the board in its 48th Annual General Meeting (AGM) held on Thursday, “after detailed deliberations and presentations, the board recommended that the members of PSO hereby approve Rs 3.15 billion or a proportionate amount in USD for PRL’s FEED to be paid by PSO through a loan facility to PRL.”
PSO will borrow the amount in Pakistani Rupees from local banks and extend it as a loan at a market competitive rate (i.e. at the same or higher premium) to PRL. However, necessary approvals will be sought from the Securities and Exchange Commission of Pakistan (SECP).
PRL will utilize the borrowed amount in Pak Rupees to purchase US dollars (through forward or spot contracts) to settle final FEED payments.
PSO will have the right to repayment and the option to convert the loan into equity after necessary approvals. This option will be utilized if deemed essential for PSO’s long-term interests.
For the purpose of the loan, PSO shall have the first Pari-Passu right in the event of PRL’s default in repayment of the loan.
This provision shall be made part of the financing arrangement with PRL.
The Managing Director & CEO and the Company Secretary of PSO have been authorized to complete the necessary legal and procedural steps for the loan arrangement.
