Reko Diq’s SOEs have deposited a total of $562.5 million into an escrow account, from which the funds will be drawn to settle any disputes.
KARACHI:
Following the signing of a final agreement “with respect to the SOEs’ participation in the reconstituted Reko Diq project,” according to a bourse filing on Friday, Pakistan’s three state-owned entities (SOEs), which hold a 25% stake in the Balochistani project Reko Diq, have deposited $562.5 million in an escrow account.
According to information obtained, the money placed in the escrow account is to be used to carry out an out-of-court settlement agreement with Tethyan Copper Company, a partnership between Barrick Gold Corporation of Canada and Antofagasta of Chile, regarding the Reko Diq Copper-Gold Project in the Chagai district of Balochistan.
In a notification to the Pakistan Stock Exchange, Pakistan Petroleum Limited (PPL), Oil and Gas Development Company Limited (OGDCL), and Government Holdings (Private) Limited, collectively the state-owned enterprises, announced that they had signed the definitive agreements (final agreements) with regard to the SOEs’ participation in the reconstituted Reko Diq project (PSX). A similar notification was also delivered to PSX by OGDCL.
In accordance with the final agreements, Pakistan Minerals (Private) Limited, a special purpose vehicle (SPV) jointly and equally owned by the SOEs and the firm (PPL) engaged in the project.
The notice stated, “The SOE SPV finally purchased a 25% stake in the project from an existing project stakeholder (first stage acquisition) as part of the transaction and execution plan agreed upon under the definitive agreements.
Each SOE paid an equal amount of the consideration for the first stage acquisition on behalf of the SOE SPV. The SOEs used funds that were deposited in an interest-bearing, offshore escrow account to accomplish this; these funds, in addition to the interest that had already accumulated, totaling $562.5 million.
The company’s proportionate share of the total was $187.5 million, plus the related proportional accrued interest, it said.
The SOE SPV’s interest in the project is reformed through a number of offshore holding entities after the first stage acquisition is finished. The SOEs’ 25% ownership of the project hasn’t altered, though.
The definitive agreements set down the rights and responsibilities of the SOEs and the SOE SPV with regard to the project and the other project participants. The notice stated that these rights and obligations pertain to, among other things, management, reporting, funding, and governance.
