On Monday, Hascol Petroleum Limited notified the Pakistan Stock Exchange (PSX) that they have settled on a payment plan with Mena Energy DMCC, a UAE-based company, to cover a pending litigation dispute by means of an out of court settlement.
Under the payment plan, a total of $9.5 million will be paid to Mena by Hascol. The amount will be split into four separate and equal payments of $2.37 million each.
This payment is being made to resolve a three year old dispute between the two companies. The full amount will be paid within the next 18 months as per their agreement.
As per Hascol’s notification,
…the board of directors [of Hascol]… has approved an out of court settlement of an ongoing litigation dispute in the English commercial court, London between Mena Energy DMCC and the company (Hascol), based on advice and recommendation of the solicitors and senior counsel representing the company in the litigation. The settlement involves the company, agreeing, subject to State Bank of Pakistan’s approval, to pay the settlement amount over a period of 18 months in installments of $2,375,000 each on May 19, 2018, July 19, 2018, January 19, 2019 and July 19, 2019.
The notification further said that the deferred payment will not hinder the business’ operations and current liquidity as such payments – like the settlement cost have already been provided for in the books.
[Hascol] has during the year 2017, by way of prudence made general provisioning of approximately Rs. 600 million in its books which will substantially minimise any adverse impact of the settlement arrangement as above and the company doesn’t anticipate any cash-flow issues for its ongoing business requirements,
Background
Hascol used to purchase oil and gas from Mena DMCC. However, the two companies developed differences after two transactions were not honored in letter and spirit.
- One of the transactions that caused this dispute was related to the quality of fuel oil supply – Mena DMCC, in their shipments, did not supply the supposed quality of fuel and also delayed several of them according to Hascol.
- In return, Hascol did not make a letter of credit for the shipments which damaged Mena’s business operations – Mena demanded payment to compensate the damages.
The case was taken to the London High Court last year, with Hascol being the defendant. After hearing the case, the Court ruled in Mena’s favor but did not prescribe any damages payable to the UAE company.
An official said,” It [the Court] didn’t prescribe the amount of claim payable to Mena, nor did it rule anything about Hascol’s counterclaims.”
