PPL, OGDC, GHPL signs definitive agreement for Reko Diq Project

December 16, 2022 (MLN): Pakistan Petroleum Limited (PPL), Oil and Gas Development Company Limited (OGDC), and Government Holdings (Private) Limited (GHPL), collectively the state-owned enterprises (SOEs) have signed the definitive agreements for participation in the Reconstituted Reko Diq Project.

“Pursuant to the definitive agreements, the company, alongside other SOEs, participated in the project through a special-purpose vehicle, jointly and equally owned by the SOEs, namely, Pakistan Minerals Limited (SOE SPV), the notification sent to PSX read.

The company further added that as part of the transaction and implementation plan agreed upon under the definitive agreements, the SOE SPV, ultimately, acquired a 25% stake in the project from an existing project stakeholder (“First Stage Acquisition”).

As per the notice, the first stage acquisition was paid by each SOE in equal proportion on behalf of the SOE SPV. To this end, the SOEs utilized sums deposited in an interest-bearing, offshore, escrow account such sums totaled $562.5 million in addition to accrued interest.

Of such total sums, the company’s proportional share was $187.5 million in addition to the corresponding proportional accrued interest, it added.

Furthermore, the completion of the first stage of acquisition, the SOE SPV’s stake in the project is restructured through a series of offshore holding companies, the SOE SPV, and by extension, the SOEs’ stake in the project, however, remains unchanged at 25%.

The rights and obligations of the SOEs and the SOE SPV with respect to the project and inter se the other project participants are governed by the definitive agreements. These rights and obligations relate to, inter alia, management, reporting, funding, and governance, the company added.

To recall, on October 31st, 2022, PPL informed the bourse, “PPL, OGDC, and GHPL, together as SOEs finalized the definitive agreements with respect to the company's participation in the Reconstituted Reko Diq Project, and said, “The company is seeking approval from shareholders for an investment in an associated company for the acquisition of 8.33% interest in the Project and subsequent capital investments as may be required”.

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