Appellate Tribunal gives go ahead to PSO for acquiring shares in PRL

KARACHI: The Competition Appellate Tribunal has given a go ahead to Pakistan State Oil’s scheme of acquiring 84 million shares in Pakistan Refinery Limited (PRL), a statement issued by PSO said on Thursday.

Competition Commission of Pakistan (CCP) had already granted approval of premerger clearance application filed by Pakistan State Oil (PSO) for acquisition of 84 million shares of Shell in Pakistan Refinery Limited (PRL).

Hascol Petroleum had approached the tribunal praying that the subject acquisition would not be in favor of market competition.

However, the tribunal upheld that PSO’s acquisition of the shares will not have any effect on the healthy competition in the market.

Pakistan Refinery Limited (PRL) earlier offered its shareholders 800 percent of the total number of shares that the respective shareholders held in their name as on April 10, 2015 as Right Issue. PSO, Shell and Chevron Global Energy Inc. (CGEI) held 22.5 percent, 30 percent and 7.5 percent Class-B shares of PRL respectively.

Following the offer, Shell conveyed its unwillingness to increase its investment in PRL and sought offers from PSO and CGEI in respect of the 84 million ordinary shares offered to Shell by PRL under the Rights Issue.

PSO expressed its intent to acquire all 84 million shares if CGEI failed to respond within stipulated deadline of thirty days, thus increasing its shareholding in PRL to 49.166 percent.

Hascol challenged the transaction by filing a Civil Suit before Sindh High Court, which is pending adjudication without any restraining order in favour of Hascol.

As per the regulatory requirements, PSO filed an application seeking premerger clearance from the Competition Commission of Pakistan whereas Hascol also filed a complaint to obstruct the transaction.

The complaint of Hascol and PSO’s pre-merger application were decided by CCP granting unconditional approval of the acquisition of up to 63 million right shares in PRL as already renounced by Shell and conditional approval of up to 21 million right shares in PRL as renounced by Shell in favor of CGEI but not accepted by it subject to the final decision of the Sindh High Court.

Commenting on the development, PSO’s spokesperson said, “PSO is pleased to receive a go-ahead from the worthy tribunal for acquisition of the shares in PRL, making PSO the largest shareholder”.

As per the plans PRL will be converted from basic hydro skimming refinery to modern refinery complex to maximize production of higher RON PMG and EURO II compliant HSD. Refining capacity of PRL will also be doubled from existing 50,000 barrels per day to 100,000 barrels per day.

This is critical in view of the Government’s plan to switch to Euro II diesel with effect from June 2017 to lower exhaust emissions in term of SOX and NOX which will contribute in environmental improvement.

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