Govt revs up efforts to finalise overdue KE stake sale

ISLAMABAD: Shanghai Electric Power (SEP) will take around six months to fainalise a new business plan for K-Electric (KE) in case a regulatory approval is granted to the long delayed privatisation of power utility on settlement of unresolved receivables and markup issue, a senior official said on Tuesday.

The government of Pakistan and SEP officials met via video-link to discuss the transfer of K-Electric shares to the latter and exchanged reassurances to continue all-out efforts for timely and meaningful process in that matter.

A senior official said the meeting’s focus was to establish the timeframe in which the SEP would be able “to finalise its business plan for the KE, in case Pakistani side completed all the requirements for the deal”.

“The representative of the SEP informed the meeting that it will take around six months to complete all the process of developing a future business plan for the company including new investments.”

A government statement said minister for Privatization Mohammedmian Soomro co-chaired a meeting with the minister for Petroleum Omar Ayab Khan regarding the transfer of KE shares to SEP, China, and related issues.

Prime Minister’s special assistant on Petroleum Nadeem Baber, and SAPM on Power Tabish Gohar also attended the meeting.

KES board chairman, Shan Ashary, and CEO K-Electric Syed Moonis Alvi were also present in the meeting. SEP also participated via zoom and discussed their continuing interest and terms. It is worth mentioning that SEP had made a public announcement of the intention to acquire KE in August 2016. Since then, almost every year it lapsed on the basis of certain regulatory and other approvals for the transaction.

If the deal matures, the SEP would buy 18.335 million shares in K-Electric Limited (66.4 percent total issued shares) with an estimated amount of $1.7 billion. In October 2016, the shareholders entered into a Sale Purchase Agreement (SPA) with Shanghai Electric Power for a value of $1.77 billion.

In March 2018, the then Prime Minister Shahid Khaqan Abbasi, while chairing the Cabinet Committee on Privatization (CCOP) had decided to issue National Security Certificate to SEP, a major requirement for the deal. But, so far, this certificate has not been issued.

Abraaj Group, a Dubai-based private equity, in partnership with Al-Jomaih Group of Saudi Arabia and National Industries Group of Kuwait, holds a total shareholding of 66.4 percent in KE.

The three-firm consortium operates in the name of KES Power, which is the parent company of KE.