Privatisation Commission (PC) on Monday submitted a plan to the Cabinet and the Prime Minister to privatise Oil and Gas Development Company Limited (OGDCL), Business Recorder has reliably learnt. The plan envisages restructuring of OGDCL as a prelude to its privatisation. "Restructuring would enable OGDCL to get much higher inflows than implied by the existing market cap of $7 billion. Its enterprise value will go up around 3 to 4 times," PC added.
The existing OGDCL business plan shows an average growth for the next five years with production profile plateauing in the next five years. No major exploration activity occurred during the last few years leading to an increase in commercial production. To improve the situation in future, PC has urged the government to take broad steps to privatise OGDCL.
Privatisation Commission has recommended that OGDCL should be restructured before its privatisation by entering a management contract with an international exploration and production company that has technical expertise in deep drilling, offshore drilling and extraction of deep reserves like the ones at Qadirpur Gas Field.
"This contract will be subject to Articles of Association of OGDCL and will include appointment of senior executives such as Chief Executive Officer (CEO), Managing Director (MD), Chief Financial Officer (CFO)," PC stated, adding that the purpose of this arrangement is management restructuring of OGDCL to maximise value of the company. An international restructuring advisor will be appointed at this stage.
The management restructuring will take place within a period of six months and the amended business plan will need approval of the Board. A new business plan would have all the possible value addition aspects. At this stage, an international advisor of global stature will be appointed to come up with an information memorandum that focuses on improving future cash flows of the company. "This will be followed by soft marketing of OGDCL by the international advisor to investors in oil sector for sale of minority stakes of OGDCL," PC proposed.
Comments
Comments are closed for this article.