Islamabad: The government has decided to fire the board of directors of Pakistan State Oil (PSO) the country’s largest firm by revenue for its criticism over the inability of its management to acquire majority shareholding in the strategic Pakistan Refinery Limited.
According to sources, the existing board of directors has already been stopped from functioning on ‘verbal orders from the centre’ for almost a week now, creating a major violation of the statutory regulations of the Securities and Exchange Commission of Pakistan (SECP).
These sources said the government has already appointed Mujahid Eshahi, a chartered accountant by profession from Lahore and a friend of Finance Minister Ishaq Dar, as chairman of the board.
“The board is being reconstituted but it has not been notified yet. The restructuring is in progress”, said Secretary Petroleum Abid Saeed when contacted.
He said it was a routine that every new government appointed a board of its choice and confirmed that the appointment of Mr Eshahi as chairman of the board had been notified after the approval of the prime minister.
He did not agree that replacement of the existing board had anything to do with the PRL issue and expressed his ignorance about the scheduled and then cancelled board meeting on February 19.
He said that legally the previous board remained in place until a new board is notified.
The post of chairman board has been lying vacant for about a year when its former chairman Sohail Wajahat Hussain ceased to hold the post on becoming a minister in the caretaker government.
The assignment was being looked after by senior director of the board Mirza Ikhtiar Baig, an industrialist considered close to the PPP.
Under the SECP rules, all listed companies are required to get their half-yearly financial results approved by the board and made it public in the interest of investors and shareholders within 45 days after December 31.
The PSO board was scheduled to consider financial results on February 19 but it was stopped from holding its meeting, a senior executive in PSO said.
He said the SECP was being requested on the advice of the petroleum ministry to condone for few days the mandatory requirement of approval of half-yearly results of PSO.
At the heart of the imbroglio is an offer by Chevron-Caltex to sell its 13 per cent shares in Karachi-based Pakistan Refinery Limited (Rs150bn entity) before it formally winds up its operations in Pakistan.
PSO has about 37pc shares in the PRL which is also jointly owned by Shell Pakistan and Chevron-Caltex. PSO has first right to take over Chevron shares but the one-month deadline for the purpose is reported to have already expired about a week ago.
Informed sources said the acting managing director of PSO Amjad Pervez Janjua did not realise the importance of the investment opportunity in PRL arising out of Chevron-Caltex’s exit from Pakistan in time and took it for approval by the board at the eleventh hour.
The board members strongly criticised Mr Janjua at the board meeting last week for seeking board’s nod on a critical matter in such a hurry and desired that a business proposal should be presented with justifications to enable board members reach a considered decision.
The former managing directors of the PSO had been openly advocating taking over majority shares in PRL for reverse integration of PSO’s business to ensure uninterrupted supply of oil products.
The board members were reportedly also critical of the fact that Mr Janjua continued to hold the top position of PSO even though the prime minister had approved his nomination in July last year as acting MD for three months or till induction of a new MD whichever came first.
Mr Janjua, however, continued to head the company for about eight months now on temporary basis.
When contacted Mr Janjua said the offer for PRL shares was still available to PSO and would remain so until sometime next month.
He said the PSO management was positively looking at the opportunity because it had a strategic value. He said the PSO would start work on the opportunity and present a case to the board for approval.
He did not agree that board was critical of his role but agreed that there was uncertainty over the status of the PSO board although the appointment of the chairman has been notified.