ISLAMABAD: The Cabinet Committee on Privatisation (CCoP) has sought opinion of Law Ministry on a proposal meant to transfer OGDCL’s shares to Petroleum Division or Sovereign Wealth Fund (SWF), lying with Privatisation Commission (PC) since years, well informed sources told Business Recorder.
The decision was taken at a meeting of CCoP held on February 7, 2024, presided over by caretaker Minister for Privatisation Fawad Hasan Fawad. The proposal had been sent by the then Petroleum Secretary Jawad Pal, who is now Secretary Privatisation Division.
Sharing the details, sources said, Oil & Gas Development Co. Ltd. was included in the ‘Privatisation Programme for Early Implementation’ by the CCoP on Oct 03, 2013.
Accordingly, the Privatisation Commission (PC) Board approved appointment of Consortium comprising Merrill Lynch International, Citigroup Global Market Limited, KASB Bank Limited as Financial Adviser in April 2014, for divestment of up to 10% GoP shares in OGDCL.
As part of OGDCL transaction, on PC’s request the Petroleum Division provided a Jumbo Certificate of 322,460,900 physical shares to PC in Sep. 2014. The physical shares were converted into PC’s CDC Account from physical to electronic form, since physical securities could not be traded on the market.
Owing to inadequate market response, the CCoP in its meeting held on Nov 08, 2014 decided to postpone the divestment of the GoP shares in OGDCL. Since the divestment of OGDCL shares was postponed, the said shares remained with PC.
In Oct 2018, PC Board recommended OGDCL for inclusion in active privatisation programme to the CCoP. However, on Oct 31, 2018, CCoP placed OGDCL in phase- II programme and inter alia directed Petroleum Division to carry out study with regard to issues/ claims of the provinces related to OGDCL after 18th amendment of the Constitution.
On Aug 08, 2019, CCoP directed PC to select any 10 PSEs from approved privatisation list by CCoP in Oct 31, 2018 and initiate process for hiring of FA and submit compliance report to CCoP. Accordingly, with the approval of PC Board on Aug 26, 2019, FA hiring process was initiated for 10 PSEs, including OGDCL.
The FA hiring process for OGDCL could not be finalized by PC, due to reservations from OGDCL’s administrative Ministry, i.e., Ministry of Energy (Petroleum Division). Thereafter, the issue was taken-up with the CCoP for guidance. On Feb 25, 2020, CCoP inter alia, directed Privatisation Division to deliberate on the proposals of Petroleum Division in consultation with concerned stakeholders in a holistic manner and submit a report thereon with viable recommendations to the CCOP in its next meeting for consideration.
Subsequently, Ministry of Energy (Petroleum Division) through a summary titled “divestment of GoP’s shares in Pakistan Petroleum Limited (PPL) and Oil and Gas Development Company Limited “ of May 05, 2021, inter alia, submitted the following for consideration of the CCoP: “in view of the above considerations, the divestment of shares in PPL and OGDCL at the current share price level is not feasible. Resolution of the circular debt issue, even partially, should help in unlocking the market price of these companies. Thereafter, the strategic sale to a reputable E&P company with its representation through a Director shall be preferred.”
CCoP in its meeting held on May 21, 2021, inter alia, approved the proposal of Petroleum Division not to divest shares in OGDCL. The CCoP decision was ratified by the Federal Cabinet on June 08, 2021.
PC has been receiving dividends of the OGDCL shares (322,460,900) in its name, as and when announced by the OGDCL Board. The dividend income is regularly remitted to the Finance Division and an amount of approximately Rs 21,492,018,985/- has been remitted so far, while an amount of Rs 1,402,704,915/- is lying with PC. Further, PC from time to time has been requesting Petroleum Division for transfer of OGDCL shares from PC to Petroleum Division, in light of CCoP decision dated May 21, 2021.
Petroleum Division, in a letter of Nov 06, 2023, consented that the shares of OGDCL in the name of PC be transferred in name of Ministry of Energy (Petroleum Division) as divestment of shares has not been allowed by CCoP.
Foregoing in view, the matter was considered by the PC Board in its meeting held on Dec 12, 2023, and it was decided to seek approval of Cabinet Committee on Privatisation (CCoP) for transfer of OGDCL shares (322,460,900) from PC’s CDC Account to Ministry of Energy (Petroleum Division).
The sources said, during discussion at the CCoP, it was observed that there is no bar on transfer of shares to Petroleum Division; however, all such kind of shares of entities are being transferred to Wealth Fund.
After discussion, it was decided that PC should seek opinion from Law Ministry whether shares are to be transferred to Petroleum Division first and then Sovereign Wealth Fund (SWF) of Finance Division or these can be transferred to SWF directly.
However, Petroleum Division is of the view that shares should be directly transferred to SWF instead of taking a long route.
Copyright Business Recorder, 2024