Cabinet body directs Mari’s shares divestment
Aftab Ahmed
The Cabinet Committee on Privatization (CCoP) has directed to complete the divestment process of 18.39 percent shares in Mari Petroleum Co.Ltd (MPCL) within the stipulated time.
Sources told Newztodays.com that the cabinet body had taken up the matter of divestment of government’s shares in its recent meeting.
In Mari Petroleum, the government holds a 20% stake, OGDCL 20% shareholding, Fauji Foundation 40% and the general public holds 20% shares.
Mari Petroleum and OGDCL have the first right of refusal to buy shares of the government in the company.
At present, the government has hired the chartered firm to divest shares of Mari Petroleum. The audit firm is conducting an audit of the value of the shares before divestment.
Sources said that OGDCL and the Mari Petroleum were waiting for an audit report regarding the value of the shares to exercise their first right of refusal.
These two companies were also interested to buy the government’s stakes in Mari petroleum. The PTI government has recently removed the cap on the dividends of the company.
Officials say that the removal of the cap on dividends would fetch a better price for the government during the divestment of shares.
However, there is another view that government should not divest its shares following the removal of the cap.
The officials had informed the policymakers in the government that the government would now be receiving more money after the removal of the cap that it could receive through divestment of shares.
However, the cabinet committee on privatization in a recent meeting has directed the Privatization division to move ahead on the plan of divestment of shares within the stipulated time.
Mari e Petroleum has been operating at a cost-plus fixed 22.5% return on equity since its inception in 1985.
Subsequently, following the ECC’s decision on May 4, 2001, the government allowed Mari petroleum to spend $20 million of its total revenue on exploration activities.
In a meeting on May 15, 2012, the ECC increased the spending limit by $ 20 million to $40 million, gradually increasing to $5 million annually in the four years beginning in 2012.
The ECC approved the abolition of the Mari GPA at its meeting on November 12, 2014, replacing the current formula of wellhead gas prices which came into force on July 1, 2014.
The government did it to allow Mari Petroleum to use its resources to carry out oil and gas exploration activities inside and outside the Mari field, including revenue from other sectors and all risks associated with such activities.
In addition, the ECC decided to continue distributing profits by Mari Petroleum, which has a 45% cap on Mari Petroleum’s guaranteed returns for the next 10 years, according to the formula.
