CCoP seeks Mari’s financials to delist from Privatization

Aftab Ahmed

To remove the company from the list of privatizations, the Cabinet Committee on Privatization (CCoP) has directed the Petroleum Division to submit a complete business proposal indicating the return on investment.

The Petroleum Division briefed the CCoP about the case proposed that the government should maintain its shareholding in MPCL.

It further suggested omitting the company from the list of privatization/divestment by the Privatization Commission as it would be in the greater national economic and general public interest.

During the subsequent discussion, the chair asked to take a decision in light of the company’s financial information.

He said that the Petroleum Division must come up with a complete business proposal indicating the return on investments. Though the economic Coordination Committee (ECC) has removed the cap, the return on the investment is still very low.

As a result, the Petroleum Division must have a comprehensive business model with multiple options for justifying the retention or sale of shares.

The Adviser to the PM on Institutional Reforms and Austerity supported the proposal by the Petroleum Division. He stated that it is one of the government’s better-performing organizations and is managed by a strategic partner.

The government must keep its stake to ensure exploration in far-flung and difficult areas of the country. Therefore, it is beneficial for the GoP to retain a seat on the board of Mari Petroleum due to its strategic importance.

He also stated that after the removal of the cap on the distribution of the dividend, it was expected that GoP would get more dividends in the future due to new exploration and production.

The Privatization Division indicated that the JV partners had the option of priority share buying. It took one year for the Privatization Commission to remove the cap on the shares and to convince the partners to show an interest in the government’s shares.

The chair stated that an informed decision can only be taken if present and future scenarios with a business model are presented.

The Cabinet Committee on Privatization (CCoP) deferred consideration of the proposal and directed the Petroleum Division to give firm justification for the proposed divestment of GOP’s shares in the Mari Petroleum Company Limited based on a business model showing returns on investment.

The model must indicate the projected profit/return of the company in view of reinvestment plans for future exploration and present it within two weeks before the CCoP.