Staff Report
ISLAMABAD:
Petroleum Division while taking serious notice of the sale of Eni Pakistan Limited to a new venture has asked managing director (MD), Eni Pakistan Limited to provide evidence regarding financial strength, and technical expertise of this venture.
In a letter dated 20th September 2021 with subject ‘Proposed Change of Control of Eni Pakistan Limited’, petroleum division as asked Eni Pakistan Limited chief (MD) to provide proves regarding source of funding for the acquisition of 50percent shareholding of Eni Pakistan Limited, details of any tax liability acquired by details of Prime International Oil & Gas Company Limited (PIOGCL) in order establish the technical and financial strength of this foreign firm (PIOGCL).
DGPC has also sought from the MD Eni Pakistan Limited to provide details of management structure showing clear lines of responsibility and processes for upstream operation providing all details of operational staff to be based in the country, details of health, safety and environmental management system to be implemented and used by the company, details of how PIOGCL will manage in practice an exploration , production and development operations acquired from M/s Eni, having no past experience in the E&P sector and details of technical and logistic resources available for E & P operations acquired from M/s Eni.
Eni Pakistan Limited and a foreign Exploration & Production (E&P) company PIOGCL (Prime International Oil & Gas Company Limited) had earlier signed Sale Purchase Agreement (SPA) on March 08, 2021 under which entire share capital of Eni was sold to PIOGCL. And, the ownership of principal shares of Eni has been equally divided between the former employees of Eni Pak Ltd, with as directors of the new venture and Hub Power Company Limited (‘Hubco’), an IPP (Independent Power Producing) company that mainly specializes in installation and management of power plants throughout various regions across the country.
According to sources, tax liability of the Eni is $118 million USD and the current cash and bank balance of Hubco is Rs 511,000,000 or $ 3,320,000 USD while currently the Directorate General of Petroleum Concession (DGPC) does not have any information that such a company or former employees of Eni have the capability to take the burden of the enormous tax liability of Eni Pakistan Limited.
In order to properly exploit the Eni blocks for efficient and maximal oil and gas extraction in the country, financial strength and technical expertise of PIOGCL, and former employees of Eni has to some extent made it clear that that
It is largely believed in the oil and gas sector that PIOGCL and former employees of Eni do not possess the strength to bear the burden of tax liability amount to $118 million USD of Eni, properly exploit the Eni blocks for efficient and maximal oil and gas extraction in the country, said sources.
It merits mentioning here that locally well-established and reputable E&P company/ies that has extensive experience of operatorship in the country and also possess a successful track record of managing reservoir with a competent team of E&P professionals should be made partner in the new venture in order to move the transaction forward.
