4 May 2007 - 18:13
  • News Code: 103804

KARACHI -- Pakistan may delay bidding for a controlling stake in the country’s top oil marketing company by several few weeks due to a legal wrangle over the disqualification of a Saudi-backed bidder, an official source said yesterday.

The government, which is selling all but 3% of its 54% holding in Pakistan State oil, had set May 19 as the bid date. The sale is expected to fetch over $500mn.

But an official involved in the transaction said the date would “most likely” be extended.

“Though the official date is still May 19, the financial adviser has been asked to inform the bidders that it could be extended to the end of May or the begining of June,” said the official.

US investment firm JP Morgan is the financial adviser for the sale.

The Sindh High Court in Karachi has suspended a government order that disqualified the Attock Group of Companies from bidding, but a final ruling in the case has yet to be made.

The official said that the government had no other option but to delay the bidding while Attock’s case was pending.

The Attock Group is backed by the Pharaon Group of Companies, whose sponsor is Saudi investor Ghaith R Pharaon. The group owns Pakistan Oilfields Ltd and several other energy sector firms.

Another senior government official said that the government may not be able to meet its deadline of completing the transaction before the 2006/07 fiscal year ends on June 30.

The government has long planned to sell stake in PSO, but has postponed it several times due to lack of investor interest.

But analysts say it is likely to succeed this time around, as many foreign and local companies have shown keen interest.

BP, the British oil and gas group, is set to join Pakistan’s Kohinoor Group in a bid for the stake.

Kohinoor was originally selected to bid with the Oman Oil Marketing Co, but industry sources say the latter would pull out of the group once BP enters.

Six other parties selected to bid include Saudi-based Aljomaih Holding Co with Kuwait’s Noor Financial Investment Co and Pakistan’s Fauji Foundation; Saudi Dabbagh Group Holding with Savola Group and Goldman Sachs (Asia); and Bakri International Energy Systems with Salsal Petroleum.

Pakistan’s MCB Bank will bid with Malaysian oil group Petronas, while other bids are due from Swiss firm Vitol and TransAsia Gas International.

According to sources, Vitol is likely to join forces with Fauji Foundation, a trust for retired members of the armed forces and their families, making it a strong contender, too.

PSO shares, valued at around $1.02bn, have risen by almost a quarter so far this year, in line with the broader Karachi share index. PSO trades at 12.5 times forecast earnings against an Asian oil sector average of more than 20 times. – Reuters

 

PIN/GULFTIMES

News Code 103804

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