Stepping into the LPG business: SSGC board turns down overpriced buyout proposal

Progas and Progas Holdings go on sale following swelling dues.

ISLAMABAD:

The Sui Southern Gas Company’s (SSGC) board of directors has blocked a move to buy Pakistan Progas Limited and Progas Holdings Limited at an overpriced amount of Rs20 billion.

Sources told The Express Tribune that some directors of the SSGC board from the private sector had supported the proposal to buy the LPG companies for Rs20 billion, however, the proposal was turned down due to opposition from majority board members in a meeting held on Monday.

SSGC Managing Director Azim Iqbal Siddiqui said that the asset value of Progas and Progas Holdings might be around Rs1 billion to Rs2 billion, respectively, and termed Rs20 billion amount too much.

Banks were set to auction Pakistan Progas and Progas Holdings to recover their outstanding dues amounting to Rs1.3 billion. The gas distributor SSGC had moved the Sindh High Court praying to get more time to evaluate the assets of the LPG group before participating in the bidding process.

The Petroleum Minister Dr Asim Hussain after assuming charge as the Adviser to Prime Minster on Petroleum and Natural Resources had announced the formation of a state-owned LPG marketing company operated by Sui Southern Gas Company and Sui Northern Gas Pipeline Limited (SNGPL).

SSGC decided to buy Progas and Progas Holdings following this announcement.

SSGC Managing Director Azim Iqbal Siddiqui said that the proposal to participate in the auction of Progas was discussed in the meeting held on Monday.

Siddiqui said that SSGC wanted to participate in the auction of Progas and had moved an application in the court seeking an extension in the auction date in order to evaluate the LPG group’s assets. He said that there was some difference in inventory figures given by the nazir of the court, hence we pleaded the court for some time to review the deal. We have planned to hire a consultant to evaluate the assets. Court hearings will resume on June 4.

He also maintained that the buyout issue will be tabled before the finance committee of SSGC to decide whether the company should go into deal or not.

Published in The Express Tribune, May 28^th, 2011.