If you’re looking for an oil marketing company in Pakistan, you may be wondering whether Hascol Petroleum Limited is a good investment. Hascol is a publicly unlisted company and has been implicated in a massive scam. The company’s finances are suspect and it lacks credit facilities. However, its single largest shareholder, Mumtaz, says that it has the potential to make a fortune. He is 74 years old and is the company’s largest shareholder.
Hascol is a Pakistani oil marketing company
Hascol Petroleum Limited is a Pakistani company that focuses on purchasing and marketing petroleum, LPG, and other petroleum-related products. It was incorporated in 2001 and received its oil marketing license from the government in 2005. Since its inception, Hascol has been involved in various petroleum-related projects. It also constructs modern storage facilities at different locations across Pakistan. It is a member of the Pakistan Business Council, Karachi Chamber of Commerce and Industry, and the Overseas Investors Chamber of Commerce and Industry.
Despite its infancy, Hascol has managed to rise from a small, regional company to one of the largest oil marketers in the world. Its business model is based on selling fuel to commercial and industrial consumers. Its franchise system allows it to sell fuel to both small and large businesses.
The company has appointed Topline Securities as its strategic adviser to help it determine strategic alternatives and identify equity investors. Its rehabilitation plan will involve restructuring current debts and raising fresh equity. The firm expects to raise around Rs17 billion to finance the plan. The company has been in a financial mess since 2018 and now needs to find a way out.
Hascol Petroleum Limited is run by Mumtaz Hasan Khan, who began his career at Burmah Shell in 1963. In 1976, he became the company’s international sales manager. He later became the Managing Director of Pakistan Services Limited, a company that owned four Intercontinental Hotels in Pakistan. In 1980, he moved to London to start his own oil trading business. He established Hascombe Limited and began trading in crude oil and petroleum products. It was a major supplier of petroleum products to Pakistan in the 1990s.
The company’s acquisition by PSO has been approved by the Competition Commission of Pakistan. The CCP bench of three members is comprised of Dr. Shahzad Ansar and Mr. Ikram Ul Haque Qureshi. The deal was approved after Hascol Petroleum Limited filed a complaint against PRL and PSO. The complaint against PRL was based on Hascol Petroleum Limited’s concerns about the potential discontinuity of its supply of refined petroleum products.
It is a public unlisted company
Hascol Petroleum Limited is a public unlisted company that was founded in Pakistan in 2001. Initially, it was a private limited company but on September 12, 2007 it changed its status to a public unlisted company. While Hascol has remained in the public eye, it has been a target of investigations by the National Accountability Bureau and the Financial Intelligence Agency.
Hascol is a Pakistani company that specializes in the marketing of petroleum products. Its inventory includes diesel, gasoline, and fuel oils. In the past few years, the company has been placed on a defaulters’ list due to its failure to meet certain requirements. In particular, the company is accused of failing to hold its annual general meeting and submit its audited accounts for 2020.
The financial difficulties faced by Hascol Petroleum Limited Pakistan are part of a bigger issue. The country’s long judicial process is a key part of this issue. The process can take up to five years. However, it gives the industrialists plenty of time to continue doing business. Moreover, many of the industrialists in Pakistan are politically connected.
In April, Hascol was suspended from its KPK marketing license after the Oil and Gas Regulatory Authority suspended Hascol’s marketing license. This was a result of its illegal storage and unauthorised selling of petroleum products. The company was also forced to write off Rs7 billion in receivables. In addition, Hascol failed to disclose details of its counterparties and its credit policy.
Despite this setback, Hascol is making progress. Last year, the company posted a loss of Rs23.5 billion in the year ending September 30, 2020, compared to a loss of Rs7.6 billion a year earlier. In addition, the company is now experiencing a decline in its net income, and the recent government decisions have encouraged it to improve its financial position.
It lacks credit facilities
The company was established in Pakistan as a private limited company in March 2001. On September 12, 2007, it changed its status to a public unlisted company. As a result of this, it lacks credit facilities to meet its needs. However, the company is working towards its rehabilitation plan.
The first significant borrowing of HPL occurred in 2009. A year later, the NBP entered the company’s borrowing history. In 2014, the NBP provided the company with Rs2 billion in response to an HPL request. At the time, Hascol’s SVP Reema Athar moved from Pak-Iran Investment Company to NBP.
Nevertheless, Hascol hasn’t yet received its cargo. On the other hand, Mena has submitted pro-forma invoices for a second fuel oil shipment and for the gasoil contract. But Hascol has not responded to these invoices. So, it has been unable to meet its delivery deadlines.
In response, Hascol and Mena had an agreement in which Hascol would contribute to the cost of returning the fuel oil shipment to Fujairah. However, Hascol claims that this agreement is invalid because the market price of fuel oil has decreased substantially since the time of the contract.
Despite its obligations to issue a letter of credit for the gasoil contract, Hascol has refused to do so. Mena, on the other hand, has no letter of credit. As a result, Hascol has breached its contract with Mena. Mena was unable to buy gasoil from Hascol because of this delay.
In addition to the gasoil contract, Hascol failed to open a letter of credit for its second fuel oil shipment. The company blames Mena for the problems in opening a letter of credit. It claims that Mena presented incorrect documents that contravened the implied term of sale. Moreover, the bank was unwilling to open a letter of credit with Mena as a beneficiary.
It has been involved in an elaborate scam
According to the FIA investigation report, Hascol Petroleum Limited Pakistan has been involved in a massive scam. The company has not only failed to meet repayment obligations but also had a pattern of opening new lines of credit to pay off earlier ones. This led to an unmanageable circular debt. As a result, Hascol was forced to default on its repayments.
The investigation into the alleged scam has uncovered a number of crooked officials of Hascol Petroleum. Two former NBP presidents and an incumbent official, along with some of Hascol Petroleum Limited directors, are suspected of obtaining a loan worth billions of rupees from a national financial institution and then laundering that money through financial fraud.
Hascol was once considered a rising star in the oil marketing industry. However, in 2020, the company was involved in a series of scandals and was stripped of its marketing license in KPK. This was due to the illegal storage and unauthorised selling of petroleum products at its Amangarh Depot. The Oil and Gas Regulatory Authority (OGRA) had clearly instructed Hascol to cease its illegal operations. As a result, Hascol took a Rs7 billion impairment against its receivables. In addition, the company refused to disclose details of its counterparties and hid its credit policies.
The National Bank of Pakistan (NBP) granted financial facilities to Hascol Petroleum Limited Pakistan in violation of prudent banking practices. This led to wrongful gains and losses for both NBP and HPL. The total amount of default stood at Rs54bn, with Rs18bn relating to the NBP alone. It is alleged that these loans were granted to Hascol against weak securities.
It has awarded a PMC services contract to TechnipFMC
The project will expand the country’s crude oil production capacity and improve its fuel supply situation. It will also support the continued economic growth in Pakistan. TechnipFMC is the senior vice president of the company. The contract is worth around $55 million.
The project will include the construction of a refinery near Karachi, which is part of the PARCO joint venture project with UAE-based Mubadala Investment Company. The company is also involved in mining coal in Pakistan, signing master shareholder agreements and loan financing agreements. The coal mine is expected to start producing coal in 2018.
Besides, Hascol has formed a new company with Vitol, called VAS LNG (Private Limited). The new company will focus on the LNG sector. The company has also acquired an LPG plant from Marshal Gas (Private Limited) for about Rs175 million. The company is also planning to operate its LPG business through the new company, VAS LNG (Private Limited).
With Pakistan’s favorable business climate and geostrategic location, the country offers attractive investment opportunities. As a result, foreign investors have accumulated majority stakes in local companies and have incorporated joint ventures to bring foreign products to the market.
