Total Parco plans Rs21 billion investment for Caltex acquisition

KARACHI: Total Parco Pakistan Limited – a Pakistan-France energy joint venture – has planned at least Rs21 billion worth of investment to complete the acquisition of Chevron (Caltex) businesses in Pakistan, a senior official said.
“The company has earmarked between $200 and $250 million for acquiring and phase-wise rebranding of Caltex stations,” the official said, requesting anonymity.
Total Parco announced acquisition of retail, commercial and industrial and aviation fuel businesses of Chevron Pakistan Ltd in the middle of July.
Chevron lubricants section, however, was not covered in the deal.
Marc Soissong, chief executive officer at the Total Parco Pakistan Limited, declined to disclose the investment figure, but said, “It is significant.”
“After all, we are acquiring terminal, stations and other infrastructure,” Soissong told a small gathering late Thursday.
“It will take 18 months for a complete changeover,” he said.
After this, a number of retail stations of Total Parco will reach around 800, he said. “We are eyeing the position of the third largest oil marketing company in Pakistan.”
Caltex has a wide network of more than 500 fuel pumps across the country. Disturbance in its supply chain, early this year, caused a serious petrol shortage in the country.
Soissong, who is also the country manager of the world’s sixth big oil and gas French company Total, said many innovations can be done in the oil marketing sector of Pakistan.
“We hope we can improve services,” he said. “Our main objective is to consolidate our businesses.” The Total Parco chief said the company has a long-term investment programme.
“There is a fantastic development potential… [the country] needs lots of energy,” he said.
Marc Bessette, consul general of France, agreed that a lot of investment can be made in Pakistan.
“There is investment potential in energy and road infrastructure and rural areas,” Bessette said. “Return on investment is high.”
Around 40 businesses, affiliated with the French companies, are operating in Pakistan.
But, Bessette expressed his concern over the security challenges in the country.
“There is no insurance cover [for big ventures] at the administration level,” he added, referring to Coface, a governmental body in France that helps firms avert and assess trade risks.
The French development agency Agence Francaise de Developpement committed 236 million euros (approximately $253 million) in Pakistan since its launch in 2007.
The agency’s focus is on financing and building hydropower plants in Pakistan. Its findings said the country generated only 6,800 megawatts of hydroelectricity against an estimated untapped 55,000MW.
The aggregate net foreign direct investment (FDI) of the Europe’s third largest economy France in Pakistan was in negative $73.4 million between July 2010 and June 2015, the State Bank of Pakistan’s data showed.
The envoy said France investment in Pakistan is small. “Our investment in Pakistan is eight times lowest than Sweden,” he said.
Swedish net FDI in the country amounted to negative $53.1 million in the last five years.
Total Parco’s acquisition decision mirrored the foreign investors’ unease about the security risks in the South Asian nation.
Well-placed sources said the company will wind up its business from Balochistan.
“It won’t do rebranding in the province,” Abdul Sami Khan, chairman at the Pakistan Petroleum Dealers Association, said. “The deal was finalised after two years of negotiations,” Khan added.