ISLAMABAD: The federal government has sought advice from the Securities and Exchange Commission of Pakistan (SECP) regarding the ENI Pakistan’s disposing of its entire share capital to the M/s Prime International Oil & Gas Company Limited (PIOGCL) and the corporate governance and capability of the PIOGCL in performance of its obligations.
The PIOGCL is a consortium of the Hub Power Holding Limited and the Eni Employee Buy-Out Group. The Petroleum Division has written a letter to the SECP and sought its advice to suggest a foolproof mechanism of requisite funding from the HUBCO for the transfer of control from the ENI Pakistan to the PIOGCL.
It is to be noted that the HUBCO had submitted an undertaking to the Petroleum Division that lacked the required unconditional financial support of the PIOGCL for obtaining the assets of the ENI Pakistan. Now the Petroleum Division has sought the SECP opinion for the transfer of ENI assets to PIOGCL. The letter reads that the Eni Pakistan Limited is disposing its entire share capital to the PIOGCL. The SECP may also like to advise us as to what could be a foolproof mechanism to make the HUBCO obligated to provide requisite funding if required due to any financial inability of the EBO Group.
To establish the financial strength of PIOGCL sponsors regarding future operations of petroleum exploration licenses and development and production leases, the Petroleum Division had asked the M/s Eni Pakistan Limited to provide an undertaking from the HUBCO that in case the PIOGCL falls short of meeting financial obligations in respect of running of operations in the future, the HUBCO will provide financial support.
In response, the Petroleum Division said that the HUBCO had stated that they could provide support to the PIOGCL including EBO’s share with regard to the acquisition price. However, they have not provided such an undertaking regarding future operations as according to them, giving such an open-ended undertaking regarding future operations is against the Companies Act 2017.
It was, therefore, requested to clarify whether the Companies Act 2017 restricted companies to provide an undertaking to another company regarding financial support for future operations or otherwise, the Petroleum division said, adding that the SECP might also like to advise it as to what could be a foolproof mechanism to make the HUBCO obligated to provide requisite funding if required due to any financial inability of the EBO Group.
The transfer of ENI Pakistan shares to the PIOGCL had been delayed due to questions raised over the financial health of the new entity. The deal was matured between the ENI Pakistan and the PIOGCL at $16.4 million. It is essential to determine the actual worth of ENI Pakistan assets in the country by a foreign firm as the determination of the actual worth of ENI Pakistan assets can benefit the national exchequer by billions of rupees while the actual determination will be helpful in running the operations of the ENI Pakistan’s oil and gas reserves in a safe manner.
Earlier, the ENI Pakistan had entered into sale-purchase agreements (SPAs) on March 8, 2021 with the PIOGCL in respect of the sale of the entire share capital. To effectuate the subject change of effective control/disposition of shares from the Eni Pakistan to the PIOGCL, the Eni Pakistan sought the government consent under the applicable petroleum rules. And, following this request, the Petroleum Division’s DGPC in a letter sent on April 1, 2022, to the Eni Pakistan managing director had asked for providing an undertaking of the M/s HPHL in favour of the PIOGCL.