KARACHI: The Cabinet Committee on Privatization (CCOP) in a meeting on Friday decided to postpone the divestment of the shares of Pakistan Petroleum Limited (PPL) and Oil and Gas Development Company Limited (OGDCL) due to low prices.
On August 21 last year, the Privatization Commission expressed its intention to divest 10 per cent shares in Pakistan Petroleum Limited (PPL) and 7 per cent shares in Oil and Gas Development Company Limited (OGDCL) through public offering to the foreign and domestic institutional investors, high net-worth individuals and general public through the Pakistan Stock Exchange (PSX).
The matter was tabled before the CCOP on Friday, but the meeting proposed a delay in divestment as the prices of both stocks are low at the PSX. “In view of the above considerations, the divestment of shares in PPL and OGDCL at the current share price level is not feasible,” the meeting said.
Furthermore, it said that the Privatization Commission should consider the sale to a reputable Exploration & Production company (E&P). In this regard, the Ministry of Energy vide its letter dated February 14, 2020, inter-alia, proposed as under:
The Petroleum Division said that the current price of OGDCL’s shares was very low so the government may not proceed on the ongoing divestment at this stage.
Moreover, it further asked the Privatization Commission to consider that the transaction is structured in a manner that instead of 7pc shareholding in OGDCL, GoP’s 10pc shares in it may be offered to a Strategic Investor Company preferably a good Oil & Gas sector Exploration & Development (E&P) company.
The ministry understands that it would bring best industry practices and knowledge, state of the art exploration and production techniques in the larger interest of OGDCL and E&P sector in Pakistan, it said, adding that the sale will result in the flow of foreign direct investment in the country.
The strategic sale may also fetch a premium over the market price as usually the sale of a large interest to one investor in a profitable company comes with a premium.