SOEs in Reko Diq deposit $562.5m

Amount deposited in escrow account which will be paid for dispute settlement

KARACHI:

Pakistan’s three state-owned entities (SOEs), having 25% stake in Reko Diq project in Balochistan, have deposited $562.5 million in an escrow account after signing a final agreement “with respect to the SOEs’ participation in the reconstituted Reko Diq project, according to a bourse filing on Friday.

The amount deposited in the escrow account is to be paid for implementing an out-of-court dispute settlement with Tethyan Copper Company – a consortium of Barrick Gold Corporation of Canada and Antofagasta of Chile – in respect of the Reko Diq Copper-Gold Project in the Chagai district of Balochistan, it was learnt.

“We are pleased to disclose that Pakistan Petroleum Limited (PPL), together with Oil and Gas Development Company Limited (OGDCL) and Government Holdings (Private) Limited, collectively the state-owned enterprises, has signed the definitive agreements (final agreements) with respect to the SOEs’ participation in the reconstituted Reko Diq project,” PPL said in a notification sent to Pakistan Stock Exchange (PSX). OGDCL also sent a similar notification to PSX.

Pursuant to the definitive agreements, the company (PPL), alongside other SOEs, participated in the project through a special purpose vehicle (SPV), jointly and equally owned by the SOEs, namely Pakistan Minerals (Private) Limited.

“As part of the transaction and implementation plan agreed under the definitive agreements, the SOE SPV, ultimately, acquired a 25% stake in the project from an existing project stakeholder (first stage acquisition),” the notice read.

Consideration for the first stage acquisition was paid by each SOE in equal proportion on behalf of the SOE SPV. To this end, the SOEs utilised sums deposited in an interest-bearing, offshore, escrow account – these sums totaled $562.5 million in addition to the accrued interest.

Of the total sum, the company’s proportional share was $187.5 million in addition to the corresponding proportional accrued interest, it said.

Following completion of the first stage acquisition, the SOE SPV’s stake in the project is restructured through a series of offshore holding companies. However, the SOEs’ stake in the project remains unchanged at 25%.

The rights and obligations of the SOEs and the SOE SPV with respect to the project and the other project participants are governed by the definitive agreements. These rights and obligations relate to, inter alia, management, reporting, funding and governance, the notice said.

Published in The Express Tribune, December 17^th, 2022.

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