Govt seeks undertaking before nod to Eni sale

DG Petroleum Concession demands undertaking ahead of transfer of Eni assets

ISLAMABAD:

The Petroleum Division has asked Eni Pakistan to provide an undertaking of Hub Power Holdings Limited (HPHL) in favour of Prime International Oil and Gas Company Limited (PIOGCL) for the sale of Eni Pakistan to PIOGCL.

The division wants the undertaking before sending the case to the government for approval of Eni acquisition deal.

Documents revealed that the Petroleum Division’s Directorate General of Petroleum Concession (DGPC), in a letter sent on April 1, 2022 to the managing director of Eni Pakistan, asked to provide an undertaking of HPHL in favour of PIOGCL for implementing the proposed change of control of Eni Pakistan to PIOGCL.

According to details, DGPC asked the Eni Pakistan MD to provide the undertaking on a judicial stamp paper mainly because if PIOGCL failed in meeting its obligations/ financing with regard to the acquisition cost and running of operations in future, HPHL would provide all such financial support for PIOGCL unconditionally.

After fulfilling the procedural requirement, the matter pertaining to the change of control of Eni Pakistan to PIOGCL will be presented to the federal cabinet for necessary approval.

Documents available with The Express Tribune revealed that Eni UK Limited and Eni Oil Holdings BV (vendor) had earlier entered into a sale-purchase agreement with PIOGCL (purchaser) for the sale of entire share capital of its subsidiary (Eni Pakistan).

The vendor requested the government’s consent – no-objection certificate – for the transaction and provided certain information according to the applicable rules.

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The financial position of one of the joint venture partners, namely Hub Power, was found satisfactory while the financial position of other partner, holding 50% shares, namely Eni Employees Group (EBO), was found to be not satisfactory.

According to sources, the energy ministry has completed the process required for the transfer of Eni’s assets to PIOGCL. However, they said that the ministry completed the process without ensuring the necessary checking of the value of assets of Eni Pakistan.

They said though Eni had deposited withholding tax of Rs390 million with the Federal Board of Revenue (FBR), the value of company’s assets was said to be between $90 million and $110 million.

Eni Pakistan and a foreign exploration and production company, PIOGCL, signed a sale-purchase agreement on March 8, 2021, under which the entire share capital of Eni was sold to PIOGCL.

Published in The Express Tribune, April 8^th, 2022.

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