Vitol’s $89m investment wiped out in Hascol Petroleum
Alan Duncan Chairman Hascol Petroleum Limited congratulates Prime Minister to reverse course on PDC
Ibn-e-Ameer
The crash in the stock price of Hascol Petroleum Limited (HPL) has wiped out Vitol’s $89 million investment.
Vitol invested $89 million in Hascol Petroleum Limited (HSL) through rights issues. But a crash in stock price almost completely wiped it out.
It occurred as a result of the crash in the company’s stock price which has fallen from over Rs. 300 to around Rs. 5 today, Chairman Hascol Petroleum Alan Duncan former foreign minister of the UK said in a statement.
Vitol has invested over $100 million in Hascol Petroleum Limited to get a 40% equity stake in the company. Vitol invested Rs. 8 billion into Hascol in January 2020.
Covid-19, unfortunately, didn’t allow this investment to raise Hascol’s sales due to the stressed demand.
To turn the company around, Vitol has completely revamped Hascol’s management. It also reconstituted the company’s Board of Directors.
He had joined Hascol as its Chairman last year. He said that they had a new CEO and management of Hascol Petroleum Limited. Alan said they were following global best practices to improve risk management after much had gone wrong at Hascol.
He said Hascol is fully cooperating with its regulators to ensure complete transparency.
We have every intention to right the wrongs of the past, Alan said. He also added that Hascol called a Board meeting for the 12th of November, 2021.
The board will review HPL’s financial accounts for the year 2020.
The federal government had rejected OGRA’s proposed fuel price increase to take effect on November 1.
OGRA had recommended hiking the retail price of gasoline by Rs. 10.73 per liter and Rs. 7.70 per liter on diesel.
The global prices are around $83 per barrel of Brent crude in wake of post covid recovery. The Government of Pakistan rightly wanted to protect consumers and the economy from rising international oil prices.
Therefore it rejected OGRA’s proposal.
The government had imposed bans on fuel imports to protect Pakistan’s oil refineries at a time when prices were low. ’He said that the decision was ill-conceived that eventually led to serious damage to the entire economy when in June 2020 there was a nationwide fuel shortage.
The refiners claimed to purchase oil at much higher prices and therefore needed protection from the falling international oil prices.
Alan said Petroleum Refiners, and the oil industry, in general, have been screaming for deregulation.
However, refineries seemed extremely hypocritical in 2020, when they rejected free-market principles to protect them from lower prices.
The lower prices could have significantly advantaged the common man and the entire Pakistani economy.
The government forcibly reduced retail prices then in May to where just about anyone in the oil industry would be selling below their costs.
Subsequently, Pakistan faced a nationwide fuel shortage in June 2020. And, the government could have set in motion again with the PDC.
The net impact of the PDC was around to cost about Rs 9-10 billion for the fortnight from November 1, 2021.
PSO and Shell would be able to eat such a bite to their cash flows.
Unfortunately, it could not only affect the supply chain of a company like Hascol and countless other smaller players but shut many OMCs down altogether.
Hascol has been facing a financial crisis in wake of its inability to pay its creditors. The company has to pay Rs. 54 billion to 19 banks and DFI’s.
He said that they had made significant progress in talks with creditors to restructure Hascol’s liabilities. And, it wants to create the necessary fiscal space to build back the company’s operations.
In the meantime, Hascol has been fighting to continue servicing its 650 retail outlets. Others also included strategic locations such as the M2 Lahore-Islamabad Motorway.
Hascol calculated a negative cash flow impact of Rs 260 million for one fortnight. Alan said that the PDC would have hampered Hascol’s ability to supply fuel significantly.
He congratulated Premier Imran Khan on behalf of the Board of Directors and management of Hascol Petroleum Limited to reverse course on PDC.
