20:38 / 29.05.2024

State retains Fergana Oil Refinery's shares as Saneg delays making full payment

The entirety of shares in the Fergana Oil Refinery was sold to Saneg two years ago for $100 million. However, the controlling packet of shares in the refinery still remains with the state, with Saneg's share amounting to 41.5%. The company has not yet completed the required payment in full.

Saneg, Uzbekistan's main oil-extracting company, is set to take control of the equipment at Uzbekneftegaz oil fields. This was envisaged in the government's investment program for the second quarter of 2024.

The exact stage of this privatization process, the object of privatization, and the value of the contract are not clear. According to the investment program, the equipment at oil fields, along with the UNG Petro network of gas stations and the Chinaz oil refinery, have been valued at a total of $70 million.

The network of gas stations and the Chinaz Oil Refinery have transitioned to the control of Petroleum Technology Group, while the equipment at oil fields is expected to come under the ownership of Saneg.

Two years ago, a privatization deal was also made with Saneg for the Fergana Oil Refinery. On May 22, 2022, the State Asset Management Agency announced that 100 percent of the refinery's shares had been sold to Saneg Industrial Energy Group LLC for $100 million.

However, as of May 29, 2024, SAMA owns 58.5 percent of the shares in the refinery, and 41.5 percent belong to Saneg.

SAMA clarified to Kun.uz that Saneg has not yet made the full agreed payment.

“Shares are transferred commensurate with the portion of the purchase price that has been paid. Once the purchase price is fully paid and the contract terms are met, the shares will also be fully transferred,” the agency explained.

No clarity was provided regarding the timeframe within which Saneg is required to complete the full payment.

Notably, the contract also imposed the following obligations on the buyer:

- to increase the production of modern, eco-friendly gasoline, diesel fuel that meets Euro-5 standards, Jet-A1 aviation fuel, and liquefied natural gas through the modernization of the refinery;
- to modernize oil units and increase production capacity by at least 2 million tons;
- to invest over $380 million for the above purposes.

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