ISLAMABAD:
In a major transfer, Royal Dutch oil firm Shell has reached an settlement to promote its 77.42% majority stake in Shell Pakistan Restricted (SPL) to Saudi agency Wafi Power LLC. This resolution comes as Shell reorganises its international enterprise, and the sale aligns with its technique to boost its mobility community. The transaction is predicted to be accomplished within the fourth quarter of 2024, pending regulatory approvals.
Oil trade specialists observe that Shell Pakistan had confronted challenges within the regulated oil market of Pakistan. Trade losses ensuing from the depreciation of the rupee towards the greenback and a deadly tanker accident in South Punjab led to a drop in market share from 13% to eight%. These elements, together with Shell’s international restructuring efforts, contributed to the choice to exit the Pakistani market.
Nonetheless, this improvement holds potential for Saudi agency Wafi Power LLC. Shell Pakistan had a 25% stake within the Parco pipeline, which is at the moment working at solely 23% capability. This provides a chance for Wafi Power to extend the pipeline’s output and, in flip, its operational capability.
Upon completion of the sale, the Shell model will proceed to be current in Pakistan by means of model licensing agreements, making certain that clients could have entry to Shell’s premium gasoline and lubricant portfolio.
Shell Pakistan Restricted, listed on the Pakistan Inventory Trade (PSX), maintains a considerable enterprise footprint in Pakistan, encompassing greater than 600 mobility websites, 10 gasoline terminals, a lubricant oil mixing plant, and a 26% shareholding in Pak-Arab Pipeline Firm Restricted.
Wafi Power LLC, a wholly-owned affiliate of Asyad Holding Group, is a outstanding gasoline retailer within the Kingdom of Saudi Arabia. Final yr, it signed a license settlement to function mobility websites beneath the Shell model inside Saudi Arabia.
In a discover to the PSX, Shell Pakistan Restricted confirmed that Shell Petroleum Firm Restricted (SPCo) and Wafi Power LLC (WAFI Power) executed a Share Buy Settlement (SPA) on October 31, 2023. The settlement entails the sale of SPCo’s whole shareholding in SPL, amounting to 165,700,304 shares, representing 77.42% of the issued share capital of the corporate. The completion of the transaction is contingent on the issuance of a public provide by Wafi Power, requisite approvals, together with clearance from the Competitors Fee of Pakistan, and the fulfilment of different closing formalities.
This resolution to exit Pakistan was initially introduced in June 2023 when the nation’s financial state of affairs was precarious. On the time, the federal government was actively concerned in regulating oil costs, and the oil trade was grappling with points associated to letter of credit (LCs) for imports of petroleum merchandise. The transfer by Shell coincided with the highest-ever will increase in petroleum product costs, which benefited oil advertising and marketing firms with increased stock positive aspects.
In keeping with the monetary outcomes launched by Shell Pakistan Restricted, the corporate achieved a revenue after tax of Rs6,450 million for the 9 months ending September 30, 2023, in comparison with the earlier yr’s revenue after tax of Rs2,864 million throughout the identical interval.
Printed in The Categorical Tribune, November 2nd, 2023.
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