Material information sent to Pakistan Stock Exchange on Monday said, “Accordingly, effective 1st July 2020, MPCL has been allowed to declare and distribute dividends in accordance with the provisions of the Companies Act 2017 (as amended from time to time) and the Companies (Distribution of Dividends) Regulations, 2017,”
Earlier in February, the federal government allowed Mari Petroleum Company Limited to fully distribute its dividend among shareholders- three years in advance- aimed at selling its remaining 18.4% stake to either existing shareholders or through the stock exchange.
The ECC acknowledged that the removal of the dividend distribution cap would ensure that the divestment transaction generated optimal sale proceeds for the government, according to the Ministry of Finance.
During the meeting, it was also decided that MPCL would ensure dividend distribution in accordance with the provisions of Companies Act 2017 and Companies (Distribution of Dividends) Regulations 2017.
The government currently owns 18.39% shares in Mari Petroleum, which it wants to unload to raise money for budget deficit financing. Oil and Gas Development Company (OGDC) has 20% shares in the company, while The Fauji Foundation is the owner of 40% of the shares.
The Fauji Foundation and OGDC both have the “first right of refusal” which they exercised in 2017 when the government offered to sell the shares. However, it’s unclear whether the first right of refusal is still relevant or not.
Cabinet Committee on Privatization had approved the transfer price for selling 18.3% stake at a 5% discount to the closing stock price one day prior to when the transfer notice was served to the joint-venture partners, in 2017. The stock at that particular time stood at Rs1,427 and the transfer price came in at Rs1,355 per share.
The original decision said that MPCL was prohibited to pay dividends beyond a certain threshold, which had built sufficient capital for future investment, till 2024. A cap was put on the dividend after the government paid higher tariffs to the company on its exploration activities.