HASCOL defaults on Rs54bn bank loans

Aftab Ahmed

Islamabad: As Hascol Petroleum Limited (HPL) defaults Rs 53.8 billion, it has offered the issuance of new shares to the banks against their outstanding loans.

Hascol bank default is the single largest default by any company in Pakistan banking history before that Dewan Group’s multiple companies had defaulted Rs 55 billion to banks.

Sources told Newztodays.com that its equity had completed depleted and currently stands at above Rs30bn negative.

Vitol is the largest institutional shareholder in Hascol Petroleum as the majority of its old sponsors have sold their shares including Saleem Butt. Vitol is continuously raising its stake in Hascol that has raised hopes for its revival.

However, it has not been able to revive despite making a struggle. Rather, it is moving towards a dead-end due to poor financial health.

Now, it is trying to settle the issue of loans with banks. One of the leading banks of Pakistan is heading its restructuring deal with other Banks. Sources said that Hascol Petroleum had offered banks to buy its shares and convert them into equity against its loan. Banks are further considering reducing the interest rate on debt given to Hascol if Vitol injects further equity in it.

At present, the interest rate is high. Hascol has also called for reducing the interest rate to 5 percent on its loans against banks.

The company has been facing controversies at different times. Even, Oil and Gas Regulatory Authority (Ogra) had named this company in the oil crisis that surfaced in June last year.

According to recent news, the Internal auditors of Hascol Petroleum Limited had submitted a report to the board of directors about false purchase orders and misappropriation in the company during 2019.

Alan Duncan, Chairman of HPL, had stated in a letter to the Securities and Exchange Commission of Pakistan (SECP) and the Pakistan Stock Exchange (PSX), “the company’s Internal Auditor received a whistleblower statement and evidence from within the company that a series of false purchase orders were created and entered into the company’s books in 2019.

The internal auditor, as required by the process, presented the subject to the Board Audit Committee, which concluded at its meeting last week that there was sufficient evidence in support of the claim to justify taking the matter to the whole Board of Directors.”