Sale of over 66pc KES Power stake in K-Electric: Shanghai Electric must get the green light within three months, PM tells Khaqan

ISLAMABAD: Prime Minister Shahbaz Sharif has directed the task force on KE headed by former Prime Minister Shahid Khaqan Abbasi to resolve all outstanding issues of KE within three months, aimed at giving green signal for sale of over 66 percent shares of KES Power to Chinese firm M/s Shanghai Electric Power, well-informed sources told Business Recorder.

A high-level delegation of KE comprising its shareholders from Kuwait and Saudi Arabia who are making efforts for years to get the issues of power utility resolved was in federal capital to muster support for resolution of issues being faced by the power utility. The government of PML(N) in its last days in 2018 made all-out efforts to ink deal on sale of 66.40 shares of KES Power to Shanghai Electric Power but the bureaucracy of that time did not cooperate due to NAB fear.

According to KE spokesperson, a delegation of K-Electric’s majority shareholders representing Saudi Arabia’s Aljomaih Holding Company, Kuwait’s National Industries Group (NIG) and Infrastructure Growth and Capital Fund (IGCF) called on Prime Minister Shehbaz Sharif on Thursday. The delegation was led by Sheikh Abdulaziz Aljomaih – Managing Director of Aljomaih Holding Company, one of the strongest conglomerates in Saudi Arabia with interests in diversified industries along with Riyadh Edrees – CEO of NIG.

Prime Minister Shehbaz Sharif highlighted that he has constituted a task force headed by former Prime Minister Shahid Khaqan Abbasi to resolve the concerns related to K-Electric for improving the power utility’s cash flows and streaming generation of electricity from its power plants. The task force members including Shahid Khaqan Abbasi, Federal Minister for Finance, Miftah Ismail, Minister for Petroleum, Dr. Musaddiq Malik and Special Assistant to the Prime Minister, Ahad Cheema were also present.

Cash flows, power generation: Khaqan-led body to help resolve KE disputes

The delegation briefed the premier about the utility’s achievement in the last 17 years. “We enjoy good brotherly relations with Pakistan. This is why we opted to invest in the power sector – which is the backbone of any economy - of Karachi, which holds a special place as Pakistan’s financial and industrial hub,” highlighted Aljomaih who was also the first Chairman of the company post-privatization.

“Aljomaih and I have been part of the KE journey since 2005. As part of the largest investment group of Kuwait, we are ambassadors of Pakistan in investment circles across the GCC. KE’s continued success can be instrumental in generating interest in Pakistan’s energy distribution sector,” shared Riyadh Edrees. Post-privatization, over $ 4 billion has been invested in KE’s value chain, enabling it to upgrade the power infrastructure including addition of new power plants.

The operational improvements since privatization have resulted in savings of $ 5 billon to the national exchequer. Today, the company has doubled the number of customers, delivers twice the amount of energy units and has halved the transmission and distribution losses as compared to 2005. The investors further informed that the transformation’s success has attracted investors like Shanghai Electric Power (SEP), one of the major players in the global energy sector. However, the acquisition process - which was formally initiated in 2016 - remained stalled due to unresolved issues, they added.

The delegation also expressed its concerns over the industry’s growing challenges that are affecting KE’s financial sustainability. The delegation sought support from the premier on the resolution of long standing issues such as the Power Purchase Agreement (PPA) and the arbitration of historical dues between KE and various government entities, which are deterrents towards the sale of KE’s majority shares. The group of investors was accompanied by Mark Skelton, Director of Infrastructure Growth Capital Fund, Shan Ashary, the Chairman of KE’s Board and Syed Moonis Abdullah Alvi, CEO K-Electric.

The delegation also called upon Dr Shahid Khaqan Abbasi, Minister for Energy (Power Division) Khurram Dastgir as well as Tauseef H Farooqi, Chairman National Electric Power Regulatory Authority (Nepra).

During the meetings, KE’s investors acknowledged Pakistan’s importance as an investment destination. They expressed that considering the historical ties and brotherly relations between Gulf countries and Pakistan, the investment was made at the time when the government was actively looking for investment in the power sector. The delegation also reiterated its firm commitment to resolving the challenges.

Copyright Business Recorder, 2022