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Sale of assets to UEG
 
 
Aftab Maken
Friday, December 24, 2010
From Print Edition
 
 

 

ISLAMABAD: British Petroleum (BP) violated the government rules by issuing a press statement about the deal to sell its Pakistan assets without prior approval of the ministry of petroleum and natural resources, a senior official said.

 

The BP issued a press statement last week, announcing its $775 million deal to sell-off its Pakistan assets to United Energy Group (UEG).

 

As per the rules, BP was required to submit its deal for approval to the ministry, but it failed to do so, the official said, requesting anonymity.

 

The official said that BP had not submitted its statement to the department concerned before issuing it to the international press.

 

“BP has to pay billions of rupees in taxes. It cannot sell its assets without paying all liabilities and getting a no objection certificate so that the buyer does not face any difficulty in taking over operations,” he said.

 

Earlier this month, the Federal Board of Revenue (FBR) informed BP to clear all tax liabilities.

 

BP’s announcement was totally silent about its liabilities. FBR has referred the case to petroleum ministry to make sure that national interest is fully protected in BP’s sale of assets, said the official.

 

In the past, the petroleum ministry has been accepting its parent company’s guarantee. Now the ministry wants to receive from UEG a guarantee of Pakistani banks having strong financial strength, he said.

 

According to the official, the government should immediately ask BP to settle its tax and corporate liabilities besides replacing the parent company’s guarantee with a reputed bank guarantee, he added.

 

BP sold fields in Pakistan to Hong Kong-based investment group UEG as part of its plan to pay for the Gulf of Mexico oil spill. UEG agreed to pay $775 million in cash, including a $100 million deposit. The company retained stakes in three unexplored offshore fields operated by OGDC.

 

UEG’s offer is $575 million more than the joint bid made by two largest exploration firms of the country, Oil and Gas Development Company and Pakistan Petroleum Ltd.

 

The purchase is UEG’s first venture in Pakistan.

 

BP aims to dispose of as much as $30 billion of assets worldwide after the worst US oil spill forced it to set aside $40 billion for cleanup and litigation. The company has divested about $21 billion of fields so far.