KARACHI, Feb 26: MCB Bank announced on Monday that it would bid to buy Pakistan State Oil (PSO) and it will be joint bidding with the Malaysian oil giant Petronas.

For this joint bidding the MCB Bank entered into an agreement with

Petronas to bid for 51 per cent stakes in PSO. The Pakistani oil marketing giant PSO is expected to be privatised by end April 2007 and the process would be completed by June.

The government hopes that top oil companies across the world would participate as the PSO, being the largest oil company, has monopoly in marketing of black and white oil in Pakistan.

PSO having a turnover of $5.8 billion and a total 3,700 outlets across the country enjoys 78 per cent share of the black oil market and 57 per cent of the white oil.

The privatisation of PSO has been a controversial issue as a number of oil experts were of the view that the selling of PSO was strategically a sensitive issue as it was related with the defense of the country. The opposition resulted in postponement and delay of the PSO privatisation.

The co-partner of the PSO biding is another oil giant of Malaysia, which has operations in 30 countries, including Pakistan where it used to produce an average 24 million cubic feet of gas per day and is involved in 3 upstream blocks in the country.

The MCB Bank and associates comprising - Nishat Mills, Nishat Chunian Ltd, DG Khan Cement and Adamjee Insurance - were among the groups that submitted their Statement of Qualification (SoQ) for the privatisation of PSO.

The announcement that the MCB Bank’s will participate in bidding for PSO did not come as a surprise to the banking and oil market experts. Experts had been hinting that the MCB was preparing to bid for PSO.

Despite a denial from the MCB Bank, some experts and sources were of the view that the MCB Bank was also preparing to off-load up to 20-25 per cent shares and was making efforts to sell the strategic stakes with management.

After the announcement about MBC Bank’s bidding for PSO, these experts said that the selling stakes would bring huge liquidity for the MCB Bank and that would be helpful for buying the PSO as price of the oil company is too big.

“The group, the owner of MCB Bank, has developed industrial empire and the PSO would boost its position as the industrial group,” commented a banker. He also said that the strategic sale with management would benefit the group as they would be still the majority shareholder.

Sources said that a leading foreign bank, looking for an option to invest in the banking industry, has shown interest to have meeting with the MCB Bank. A top-level delegation of the foreign bank is in Pakistan for the purpose.