BAFL 50.00 Increased By ▲ 3.50 (7.53%)
BIPL 22.46 Increased By ▲ 1.31 (6.19%)
BOP 5.43 Decreased By ▼ -0.10 (-1.81%)
CNERGY 5.07 Increased By ▲ 0.17 (3.47%)
DFML 18.99 Increased By ▲ 0.17 (0.9%)
DGKC 80.18 Increased By ▲ 0.18 (0.23%)
FABL 33.03 Increased By ▲ 2.18 (7.07%)
FCCL 20.26 Decreased By ▼ -0.13 (-0.64%)
FFL 9.61 Increased By ▲ 0.05 (0.52%)
GGL 13.65 Decreased By ▼ -0.32 (-2.29%)
HBL 121.09 Increased By ▲ 3.14 (2.66%)
HUBC 122.34 Decreased By ▼ -1.46 (-1.18%)
HUMNL 7.98 Increased By ▲ 0.03 (0.38%)
KEL 3.97 Increased By ▲ 0.46 (13.11%)
LOTCHEM 28.05 Decreased By ▼ -0.50 (-1.75%)
MLCF 42.12 Increased By ▲ 0.02 (0.05%)
OGDC 121.85 Increased By ▲ 0.84 (0.69%)
PAEL 20.12 Increased By ▲ 1.28 (6.79%)
PIBTL 5.83 Increased By ▲ 0.13 (2.28%)
PIOC 116.39 Increased By ▲ 2.68 (2.36%)
PPL 110.71 Increased By ▲ 2.36 (2.18%)
PRL 29.58 Increased By ▲ 1.76 (6.33%)
SILK 1.09 Increased By ▲ 0.02 (1.87%)
SNGP 68.95 Decreased By ▼ -0.45 (-0.65%)
SSGC 13.77 Increased By ▲ 0.52 (3.92%)
TELE 8.79 No Change ▼ 0.00 (0%)
TPLP 14.67 Increased By ▲ 1.02 (7.47%)
TRG 90.65 Decreased By ▼ -1.29 (-1.4%)
UNITY 27.25 Increased By ▲ 0.59 (2.21%)
WTL 1.62 Increased By ▲ 0.05 (3.18%)
BR100 6,648 Increased By 104.2 (1.59%)
BR30 23,568 Increased By 358.1 (1.54%)
KSE100 64,718 Increased By 800.4 (1.25%)
KSE30 21,594 Increased By 242.4 (1.14%)
Print Print 2023-01-31

Getting Daharki Power shares: ECC allows FF $2.9m equity investment

ISLAMABAD: Economic Coordination Commit-tee (ECC) of the Cabinet has allowed Fauji Foundation (FF) equity investment...
Published January 31, 2023

ISLAMABAD: Economic Coordination Committee (ECC) of the cabinet has allowed Fauji Foundation (FF) equity investment of $ 2.9 million for acquisition of 2,750,000 shares (18.64 per cent) of Daharki Power Holdings Limited BVI, sources in Finance Ministry told Business Recorder.

According to Finance Division, State Bank of Pakistan (SBP) forwarded the request of M/s Fauji Foundation through Askari Bank Limited, to seek approval of acquisition of 2,750,000@ shares (18.64% stake) of Daharki Power Holdings Limited, BVI, under ‘Put option’ exercised by Asian Development Bank (ADB), against remittance consideration of$ 4.9 million.

The ECC on SBP’s recommendation approved FF’s request to make equity investment abroad of $ 12 million in the offshore company Daharki Power Holding Ltd, BVI (DPHL) on April 22, 2008. Fauji Foundation, Asian Development Bank and Daharki Power Holdings Limited, BVI entered into a Put Agreement on April 24, 2018, amended later on in September 2008, which provided ADB the right to exercise Put Option in respect of 2,750,00 on shares subscribed by it.

Differences with CPPA-G/ GoP: FPCDL ready for out-of-court settlement

As per FF, ADB served the Put Notice for $ 19.250 million; however, FF negotiated the amount of $ 4.9 million for the benefit of the company. FF had submitted an auditor’s certificate for break-up value of shares in which break-up value of DPHL, as per management accounts of December 2021, was $2.53 per share.

To liberalize and deregulate the country’s economy, the federal cabinet in its meeting held on May 16, 2001 allowed equity-based investments abroad by resident Pakistani companies on the basis of set criteria which states that cases of private sector would be dealt by the SBP and decided by the ECC, but was later amended by the ECC on January 20, 2021 providing waiver/ exemption and regularization of the cases under Category-C of the approved policy, to be decided by the SBP or ECC with the stipulation that SBP would grant waiver/ exemption/ regulation to the residents for their investment up to $ 10.00 million, whereas cases in excess of $ 10.00 million will be submitted to the ECC.

The sources said, State Bank of Pakistan argued that as per sub-para (i) of Category-C of the policy, Chapter 20 of Foreign Exchange Manual (FEM)), Fauji Fertilizer being incorporated as a trust under Charitable Endowment Act 1980, did not meet the requirement of provision of FEM and would require approval of ECC to waive off the provision of the policy.

SBP was asked to clarify under which rule the said waiver was being sought from ECC. SBP clarified that the policy had been incorporated under Chapter 20 of FEM in terms of ECC decision of January 20, 2021; hence, any waiver from the policy would also require approval of ECC. Furthermore, the cumulative investment of Fauji Foundation in DPHL exceeding $ 10 million (i.e., USD 12 million earlier, and $ 4.9 million now), also require approval of ECC.

Finance Division noted that the instant case of FF did not need/ require approval from ECC, being an investment of $ 4.9 million, in the light of ECC decision of January 20, 2021 and the case should be decided by SBP at their end.

However, SBP considered it a cumulative investment in continuation of earlier investment of $ 12 million allowed by ECC in its decision of April 22, 2008, bringing total investment by FF to $ 16.9 million for acquiring 2.750 million remaining shares of Daharki Power Holdings Limited under Put Option exercised by Asian Development Bank.

Upon acquisition of 2.750 million shares of DHPL, Fauji Fertilizer would liquidate DPHL on final payment of loan due in June, 2023 and repatriate the liquidated proceeds to Pakistan.

Finance Division, sources said, requested the ECC to allow Fauji Foundation for equity investment of $ 4.9 million for acquisition of 2,750,000 shares (18.64% stake) of Daharki power Holdings Limited and also grant waiver/ exemption to Fauji Foundation from the policy enumerated in Foreign Exchange Manual (chapter 20), being incorporated as a trust under charitable Endowment Act 1980.

Moreover, any investment abroad by residents under the said policy in continuation of earlier investment with the approval of concerned forum would be considered as a cumulative investment and would require approval of ECC in case investment exceeds $ 10 million in total.

The sources said ECC has approved the proposal of Finance Division allowing Fauji Foundation (FF) equity investment of $ 2.9 million for acquisition of 2,750,000 shares (18.64 per cent) of Daharki power Holdings Limited BVI. However, the ECC decision is yet to be ratified by the Federal Cabinet.

Copyright Business Recorder, 2023


Comments are closed.

Muhammad Azhar Jan 31, 2023 09:32am
Please note aforementioned matter related to Fauji Foundation but not Fauji Fertilizer
thumb_up Recommended (0)
Taiq Jan 31, 2023 10:47am
So the military gets to have its way, while the country is starving of dollars
thumb_up Recommended (0)

Getting Daharki Power shares: ECC allows FF $2.9m equity investment

Israel-Gaza conflict to ‘severely depress’ Palestinian economy: IMF

Illegal foreigners impact Pakistan’s security, economy: COAS

Pakistan’s future is ‘very bright’: IMF officials laud improvement in economic situation

Inter-bank: rupee secures marginal gain against US dollar

Open market: rupee unchanged against US dollar

Pakistan’s central bank reserves decrease $237mn, now stand at $7.02bn

Bulls dominate as KSE-100 hits new peak above 64,700

Al-Azizia case: IHC says will hear Nawaz’s appeal on merit

Denmark passes bill to stop Holy Quran burnings

Franchises announce retentions for PSL 2024