The Petroleum Division has questioned about Eni acquisition deal and inquired about the source of funding for Prime International Oil and Gas Company Limited (PIOGCL).
Following the sale of Eni Pakistan to a new venture, the Petroleum Division has asked the managing director of Eni Pakistan to present evidence of financial strength and technical expertise of the new company.
Taking notice of the change of ownership, the Petroleum Division wrote a letter on September 22, 2021 titled “Proposed Change of Control of Eni Pakistan Limited” and demanded that Eni Pakistan MD provide proof of source of funding for the acquisition of 50% shareholding in the company.
It also sought details of any tax liability acquired by PIOGCL in order establish the technical and financial strength of the enterprise.
Directorate General Petroleum Concession (DGPC) has asked Eni Pakistan MD to provide details of management structure by showing clear lines of responsibility and processes for upstream operation as well as share particulars of operational staff based in the country.
Furthermore, details of health, safety and environmental management system to be implemented and used by the company were sought along with the plan showing how PIOGCL would manage exploration, production and development operations.
It pointed out that PIOGCL had no past experience of working in the exploration and production sector.
Eni Pakistan and PIOGCL, a foreign exploration and production (E&P) company, signed a sale-purchase agreement on March 8, 2021 under which the entire share capital of Eni was sold to PIOGCL.
The ownership of principal shares of Eni has been equally divided between former employees of Eni Pakistan and Hub Power Company (Hubco), an independent power producer that specialises in the installation and management of power plants.
According to sources, Eni’s tax liability stands at $118 million and the current cash and bank balance of Hubco is Rs511 million or $3.32 million while DGPC has no information whether such a company or former employees of Eni have the capability to take the burden of enormous tax liability or not.
It is largely believed in the oil and gas sector that PIOGCL and former employees of Eni do not have the strength to bear Eni’s tax liability or properly exploit the company’s exploration blocks for efficient and maximum oil and gas extraction in the country, said sources.
Local and reputed exploration and production companies that have extensive experience should be made partners in the new venture in order to take the transaction forward.
When contacted, Eni spokesperson said that Hubco was one of the largest private listed energy companies, which has invested in over $4 billion worth of energy projects over the past six years.
“Hence, it is a financially strong entity, which will invest 50% for the acquisition of Eni Pakistan’s assets,” the spokesperson said.
“The employees’ group consists of over 100 Eni officials, who will pay the remaining 50% amount,” he said. “The source of their share will be their personal funds and savings.”
The group of Eni employees includes experienced oil and gas industry professionals, who have decades of experience in technical and commercial areas, he said.
They have exhaustive experience in the exploration and production sector of Pakistan and around the world, which would enable PIOGCL to manage Eni assets, the spokesperson said.
It is pertinent to mention that these employees are already managing assets of the company, hence, there would be no significant transformation after the change of ownership, the official said.
“All upstream operating companies of Eni in Pakistan are up to date with their tax compliance and if disputes arise, they will be addressed at appropriate appeal forums,” he said. “Therefore, no tax liability would be acquired by PIOGCL.”
Published in The Express Tribune, October 2nd, 2021.
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