The board of directors of Sui Southern Gas Company (SSGC) has refused to accept the letter of comfort issued by the Finance Division, which is required before the grant of no-objection certificate for the transfer of Pakistan Steel Mills’ (PSM) assets to its new subsidiary.
Sources told The Express Tribune that the Cabinet Committee on Privatisation (CCOP) had earlier given directive that SSGC should withdraw litigation/ stay order against PSM following the issuance of letter of comfort by the Finance Division.
CCOP also told the Petroleum Division to hold meetings with the relevant stakeholders for the settlement of payables to SSGC for gas supply.
The federal cabinet, in its meeting held on August 17, 2021, ratified the decisions taken by the CCOP.
Though the Finance Division has issued the letter of comfort, representatives of the Petroleum Division and SSGC conveyed to the CCOP in a meeting held at the end of last month that the SSGC board did not find the letter satisfactory.
SSGC’s no-objection certificate is required for the approval of Scheme of Arrangement for the Pakistan Steel Mills Corporation’s (PSMC) privatisation transaction.
SSGC board has suggested alternative options for consideration of the Ministry of Industries and Production and PSM.
When contacted, an SSGC spokesperson said “arrangements are still under discussion with the ministries of petroleum, industries, privatisation and Finance Division”.
“Once things are finalised, they will be taken to the board for deliberation and approval.”
The financial advisers, appointed by the Privatisation Commission, in a brief presentation had highlighted the need for the issuance of no-objection certificate by SSGC for the transfer of PSM’s core operating assets to its subsidiary Steel Corp (Pvt) Ltd, as envisaged in the Scheme of Arrangement, besides the withdrawal of stay order against PSM.
Ministry of Industries’ additional secretary and DG (gas) Petroleum Division apprised the CCOP that a reference had been forwarded to the Law Division for its opinion on the disputed amount between PSM and SSGC pertaining to the late payment surcharge.
Alternative options for the settlement of the outstanding amount were also under discussion among the Petroleum Division, Industries and Production Division, SSGC and PSM, they said.
The additional secretary, while expressing apprehension that the resolution of the issue may take some time, emphasised that to facilitate the approval of PSM’s Scheme of Arrangement by the Securities and Exchange Commission of Pakistan (SECP), SSGC should consider amending its recovery suit/ claim.
SSGC should shift its charge/ claim from core assets, ie, steel plant and machinery and land measuring 1,229 acres envisaged to be transferred to Steel Corp (Pvt) Ltd, to other assets of PSM, which sufficiently covered the amount claimed by SSGC, the additional secretary said.
After receiving the input/ comments of the Petroleum Division and SSGC, the energy minister stressed that in compliance with the cabinet’s decision, the Petroleum Division should convene a meeting of all concerned to further deliberate on the proposal to resolve the outstanding issue so that the requisite no-objection certificate was issued to PSM.
Later, the additional secretary updated the meeting on the status of Scheme of Arrangement and said that the audited financial statements of PSM for the period ending June 30, 2021 would be presented to the PSM board for approval/ adoption.
Attention of the Ministry of Industries and Production was also drawn to the appointment of external auditors of Steel Corp (Pvt) Ltd as required under the Companies Act and emphasised by the SECP.
Published in The Express Tribune, January 20th, 2022.
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