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ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has approved effective change of control from M/s Eni Pakistan (Companies) to Prime International Oil and Gas Company Limited, official sources told Business Recorder.

Sharing the details, sources said, M/s Eni ULX Limited, M/s Eni UK Limited and M/s Eni Oil Holdings were the parent Companies of M/s ENI Pakistan Limited, ENI Pakistan (AEP) Limited and ENI Pakistan (M) Limited, respectively. The parent Companies had entered into Sale Purchase Agreements (SPAs) dated 08-03-2021, with Prime International Oil & Gas Company Limited (PIOGCL) in respect of sale of the entire share capital of its subsidiaries in Pakistan. In order to effectuate the subject change of control/disposition of shares from M/s Eni to PIOGCL, M/s Eni had requested the Government for its consent under the applicable petroleum rules.

The companies required approval of the “Government” under Rule-58(d) of the Rules 1986, Rule-59(d) of the Rules 2001, Rule 72(dl of the Rules 2009 and Rule-75(d) of the Offshore Rules-2003, for change in effective control I disposition of shares from the seller (Eni) to the buyer (PIOGCL).

Petroleum Division recently noted that the Security Exchange Commission of Pakistan (SECP), Board of investment (BoI) and Federal Board of Revenue (FBR) were requested for provision of NOCs regarding the three Eni Companies for said change in effective control. The FBR had stated that there was no tax liability at present, whereas FBR Customs Karachi had indicated an outstanding amount of Rs. 193 million which was sub-judice in Sindh High Court.

However, SECP and BoI had shown no concern and had stated that the matter may be decided by the concerned Ministry as per the applicable rules. Petroleum Division had examined the case and found that all financial obligations had been cleared by the seller except indexed rental amount, which was sub-judice in the Sindh High Court.

According to the information provided by the buyer, M/s PIOGCL seemed technically sound as employees of Eni Pakistan would look after the operations. M/s PIOGCL had shareholdings in HUB Power Holdings Limited (Hubco) (50%) and ENI Employee Buyout Out Group (EBO group) (5O%). In order to establish financial strength of M/s PIOGCL, M/s Eni Pakistan was asked to provide an undertaking from M/s Hubco in favor of the Government, that in case M/s PIOGCL and its EBO Group faced shortfall for meeting financial obligations with regards to acquisition price and running of operations in future including index rental and decommissioning costs of both active and surrendered exploration licenses and development & production leases M/s Hubco would provide the requisite financial support to M/s PIOGCL and would be liable for all obligations to the government. In response thereto M/s Hubco had provided an undertaking covering the acquisition price and future operations to the Government.

In favour of PIOGCL: Eni Pakistan asked to provide undertaking of HPHL

The sources said Finance Division did not offer any comments as it was of the view that the transaction was purely a commercial matter. Whereas, Ministry of Law &Justice was of the view that the undertaking should be in favour of the Government and the Government may keep the original in its record. The undertaking provided by M/s HUBCO had been reviewed and was in line with the advice of M/o of Law & justice. It was stated that the applicable rules required approval of federal government, ie, the Federal Cabinet for change of effective control.

Petroleum Division submitted following proposals for consideration and approval of the ECC of the Cabinet: “Grant of approval for change effective control from M/s Eni ULX Limited, M/s Eni UK Limited and M/s Eni Oil Holdings B.V, in respect of its subsidiary companies, ie, M/s ENI Pakistan Limited, ENI Pakistan (AEP) Limited and ENI Pakistan (M) Limited, respectively, to M/s Prime international Oil & Gas Company Limited (PIOGCL), subject to the following conditions; (a) M/s PIOGCL shall be liable to the Government for all the minimum work commitments and financial obligations, including decommissioning cost and the matters pending in the Courts, in respect of all surrendered and active Exploration Licenses and Development and Production Leases, both operated and non-operated by the three Eni companies; (b) In case of any miscommunication/ misinterpretation, withholding of information and concealment of facts or any default thereof shall render the consent and approval null and void and assignor and or assignee shall be responsible for the same and will be liable to pay any penalty as decided by the Government; and (c) the Government’s revenues will not be adversely affected after this change of effective control.”

After detailed discussion, the Economic Coordination Committee approved “effective change of Control from M/s Eni Pakistan Limited (Companies) to Prime International Oil and Gas Company Limited” and approved the proposal subject to the condition that a specific undertaking shall be sought from M/s Prime International Oil & Gas Company Limited (PIOGCL) regarding payment of outstanding amount of Rs. 193 million pertaining to leviable duty & taxes, and outstanding indexed rent, which were sub-judice in the court.

Copyright Business Recorder, 2022

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