PSO approves Rs3.15bn loan to propel PRL’s FEED costs

October 24, 2024 (MLN): After detailed deliberation, the Board of Management of Pakistan State Oil (PSX: PSO) has approved providing Rs3.15 billion (or a proportionate amount in USD) to Pakistan Refinery Limited (PRL) as a loan for FEED costs.

According to a notice issued by the oil giant to the PSX today, PSO will borrow the aforementioned amount in Pak Rupees from local banks and extend it as a loan to PRL at a market-competitive rate (i.e., at the same or a higher premium), subject to necessary approval from the SECP.

PRL will utilize the borrowed amount in Pak Rupees to purchase US dollars (through forward or spot contracts) to settle final FEED payments.

PSO will have the right of repayment and an option to convert the loan into equity after necessary approvals.

"This option will be utilized if deemed essential for PSO's long-term interests," the management stated.

Furthermore, for the purpose of the loan, PSO shall have the first Pari-Passu right in the event of PRL's default in repayment of the loan.

This provision shall be made part of the financing arrangement with PRL.

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