UAE groups set for $500 million PSO bid

DUBAI — Two UAE groups are gearing up for stiff competition to win a majority stake in Pakistan's premier oil company next month in an open bidding process that also includes other Middle East investors from Saudi Arabia, Kuwait and Oman.

By Muzaffar Rizvi

Published: Tue 10 Apr 2007, 8:51 AM

Last updated: Sat 4 Apr 2015, 9:06 PM

“Abu Dhabi Group and Al Ghurair Investment — the two UAE groups among seven qualified bidders for Pakistan State Oil (PSO) — have completed the first phase of due diligence,” a senior official of Pakistan's Privatisation Commission told Khaleej Times.

“Middle East investors have shown strong interest in the energy sector of Pakistan and they will participate in PSO bidding process on May 19,” he said adding that consortiums involving Saudi and Kuwaiti firms have also completed due diligence earlier this month.

TransAsia Gas International (Al Ghurair Investment) and Bakri Energy Company with Salsal Petroleum (Abu Dhabi Group) are being considered serious contenders for the biggest state-run oil firm of Pakistan. Two groups are expected to face close competition from Saudi and Kuwaiti investors who are also among front-runners to clinch 51 per cent majority stake in PSO.

Saudi-based Aljomaih Holding Company with Kuwait's Noor Financial Investment Company and Pakistan's Fauji Foundation along with another consortium involving Saudi Dabbagh Group Holding Company with Savola Group and Goldman Sachs are also among potential bidders who qualified for the bidding next month.

Pakistan's Kohinoor Group and Oman Oil Marketing Company; MCB Bank and Malaysian oil giant Petronas; and Vitol S.A. of Switzerland are also in final round competition for PSO which has a market share of more than two-thirds in the country.

Moreover, Attock Group, backed by the Pharaon Group of Companies, was allowed by the Sindh High Court last week to participate in the bidding process. The group was earlier disqualified by the Privatisation Commission on the recommendations of the PSO privatisation transaction committee.

The two parties will appear in court on Wednesday for a further hearing of case.

The PSO sale is expected to raise over $500 million in privatisation proceeds and is scheduled to take place on May 19, but the legal wrangle over Attock Group's participation could cause a further delay in the bidding process. The government is keen to complete the transaction and handover the company to new management by June this year. It will be a major deal after the privatisation of Pakistan Telecommunication Company Limited, which was acquired by Etisalat last year for $2.598 billion.

PSO is the largest oil company in the country as well as a listed entity on Pakistani bourses. It supplies fuels such as furnace oil, diesel, jet fuel, lubricants and compressed natural gas to consumers through its 3,700 outlets across the country.

Pakistan is making its second attempt to sell the stake in PSO. The government scrapped a plan to sell the company in 2003 after Kuwait Petroleum Corporation, one of two bidders, didn't follow through on its bid. The second bidder was Pakistan's Fauji Foundation.

PSO, which has a market capitalisation of around $1 billion, reported a net profit of Rs1.14 billion ($18.8 million) for the six-month to December 31,2006. The company's sales of petroleum products rose 28.8 per cent to Rs197.7 billion during this period.

Analysts expect PSO's earnings to improve in coming quarters with the rise in oil prices in the international market. Consumption of petroleum products in Pakistan also registered an increase of 17 per cent during the first seven months of financial year 2006-07 that will also boost PSO sales and profits.

PSO shares yesterday traded as high as Rs365.75 and closed at Rs363, up Rs8.45 from Friday's closing rate of Rs354.55 on Karachi Stock Exchange.

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