KARACHI: The Hub Power Company Ltd (Hubco) said on Thursday its joint-venture firm signed separate sale-purchase agreements with four Eni-related entities to fully acquire the Pakistan business of the global energy exploration giant.

It’s carrying out the transaction through Prime International Ltd in which Hubco controls 50 per cent shares through its subsidiary Hub Power Holdings Ltd. The other half of the shareholding in Prime International is owned by Eni’s Employee Buyout Group.

“The Eni transaction involves Prime purchasing 100pc shareholdings of Eni Pakistan Ltd, Eni AEP Ltd, Eni Pakistan (M) Ltd and Eni New Energy Pakistan Ltd from the selling entities,” it said.

As part of the exploration and production sector strategy, the joint venture is looking for growth opportunities in oil and gas fields that it already owns as well as new fields that the government may put on the auction block.

Hubco told shareholders the change of control at Eni has been approved by the federal cabinet, director general of Petroleum Concessions and other “relevant authorities”.

In the latest financial accounts, Hubco recorded its shareholding in Prime International as a long-term investment at Rs467.3 million.

Last month, Hubco’s shareholders also approved a resolution in their annual general meeting to allow the company to extend bank guarantees of up to $476,000 in favour of Eni vendor companies on behalf of Prime International.

According to Standard Capital Sec­urities Strategist Faisal Shaji, Pakistan’s sedimentary basins — a low area in the earth’s crust containing oil reserves — are “high risk”. Hence, they offer a low probability of the existence of reserves.

That’s why the seven supermajor energy companies, which include Eni, aren’t too enthusiastic about investing in Pakistan, he said.

In contrast, Hubco is in need of diversification as its furnace oil–fired power plant of 1,292 megawatts has been operating on a low load factor.

The load factor, which is the maximum output for a power unit after taking into account all scheduled outages, for Hubco’s base plant was only 11.7pc for 2021-22. The level of output generated by the plant is determined on the load demanded by the Central Power Purchasing Authority as well as the plant’s availability.

The Eni transaction will let Hubco enter the energy exploration segment as the joint-venture firm will make use of the fields previously controlled by the Italian multinational.

The country’s oil reserves went down 7pc year-on-year to 233m barrels at the end of 2021-22. National gas reserves also plunged 7pc to 19,513bn cubic feet on an annual basis.

Hubco’s share price rose 0.5pc to Rs69.71 apiece on Thursday.

Published in Dawn, November 18th, 2022