KARACHI, Dec 13: Monday was the last day for submitting Expressions of Interest (EoIs) for 51 per cent shares in National Refinery Limited (NRL) and the market expects the transaction to have received a momentous response from local and foreign investors.

Privatization Commission may be expected to disclose the number and names of individuals and groups who have submitted EoIs in a day or two, though the processing of documents would naturally take some time.

The government has put on block 34 million shares, equivalent to 51 per cent shares in National Refinery Limited (NRL) for strategic sale. NRL happens to be the largest among stock market listed refineries and the second largest refinery in the country, after PARCO.

The National Refinery is also the only refinery in the country with diversification in lube base oils in which the company was understood to enjoy market share of more than 70 per cent.

Sanguine margins in that sector had contributed greatly to the company's growth in profitability. For raising production in NRL's lube base oil sector, the company was last believed to have executed a process Design Package Agreement and Dill Chill Process Licence agreement with Exxon Mobile, USA. The project that was estimated to cost approximately Rs950 million was expected to be completed and commissioned during the summer of 2005.

Compared to the other two prospective privatization plays, namely, Pakistan State Oil (PSO) and Pakistan Telecommunication Company Limited (PTCL), the NRL is relatively smaller in size and therefore there could be too many parties in the run to grab the controlling equity. Market sources are expecting the transaction to generate amount somewhere between $220 to $250 million in privatization proceeds for the government.

During the last two years since January 2003, the 10-rupee share in National Refinery has perhaps been one of the top performers at the stock exchanges. The share of the par value of Rs10 was priced at Rs81 on January 1, 2003. It is now trading at Rs275 ex-dividend, reflecting an incredible gain of 240 per cent.

The stock is decidedly expensive for the small investor, but something that the institutions and funds may have found to be an exceedingly wise investment decision, in case their entry timing was perfect. Interestingly, the NRL stock had hit the bottom in 1998, when the share price had dipped to as low as Rs9 a piece.

A pauper, who may have picked up the stock then, would now be a millionaire. But no one including the legendary investment guru Warren Buffet (the second richest man in the world -- whose Berkshire Heath way's is the most expensive share in US) could have predicted such a surge in NRL's stock price.

The two major parties who have made no secret of their enormous interest in acquisition of NRL's strategic equity include Pakistan State Oil (PSO) and the Attock Group (Pakistan Oilfields).

"Both the companies are interested in achieving a vertical integration through the NRL acquisition", commented Mohammad Owais, at stock brokerage firm, First National Equities Limited.

The reason for PSO's interest in NRL was that without the Refinery in its fold, the company dreaded a drop in its market share because of uncertainty on the supply side. Pakistan Oilfields, the analyst said, also appeared to be a serious contender.

POL was planning to offset the possible impact of its fast depleting hydrocarbon reserves on earnings in the medium term without taking excessive exposure on the exploration side.

The battle for NRL would, thus, be interesting, as both PSO and POL were never short of funds and were comfortably placed to leverage themselves, if need be, for raising cash for acquiring NRL.