Amidst economic uncertainty engulfing Pakistan, the country's Shell Petroleum Company (SPCo) announced to sell its shareholding on Wednesday.
The SPCo holds about 77 per cent stake in Shell Pakistan, the local company carrying out the business.
In a letter addressed to the Pakistan Stock Exchange Limited, Shell Pakistan said that SPCo had notified it about the decision to offload its shareholding in the cash-strapped country.
"The Board of Directors of Shell Pakistan Limited (SPL) in a meeting held on June 14, 2023, have been notified by SPCo of its intent to sell its shareholding in the SPL,” the company said in the letter.
So far, it is unclear how much of its stake SPCo is selling. The company suffered losses in 2022 due to exchange rates, the devaluation of the Pakistani rupee, and overdue receivables.
The SPL in the letter said the decision by the SPco would not impact its current business operations in the country.
The business community termed the announcement as a decision by a key multinational to exit Pakistan when the country needed a lot of global support to come out of the financial crunch.
“One more multi-national company intends to exit from Pakistan. Shell Pakistan Limited was notified by a parent that they intend to sell their Pakistan operations,” tweeted Shahid Ali Habib, a broker with the leading Arif Habib brokerage.
The decision by SPCo may not go well with the business sentiment prevailing in the crisis-hit country.
Business confidence is running low in Pakistan as the country failed to reach with the IMF a staff-level agreement on the much-needed USD 1.1 billion bailout package aimed at preventing the country from going bankrupt.
The funds are part of a USD 6.5 billion bailout package the IMF approved in 2019, which analysts say is critical if Pakistan is to avoid defaulting on external debt obligations.
Pakistan’s economy has been in a free fall mode for the last many years, bringing untold pressure on the poor masses in the form of unchecked inflation, making it almost impossible for a vast number of people to make ends meet.
The country’s official foreign exchange reserves stand at USD 3.9 billion, and any delay in refinancing the loans could pull the reserves much below the USD 3 billion mark.