A high-level committee meeting headed by Abdul Razak Dawood, Prime Minister's Advisor, has been rescheduled for Tuesday(today) to discuss the issuance of National Security Certificate (NSC) to Chinese company M/s Shanghai Electric Power (SEP) for purchase of KE's 66.40 per cent from M/s Abraaj for $ 1.77 billion.
A team of KE including officials of M/s SEP and M/s Abraaj have landed in the federal capital to expedite issuance of NSC which has not yet materialized due to non- payment of liabilities of CPPA-G and SSGCL.
Power Division has argued at various meetings/forums, that the outstanding liabilities including interest payments against KE in favour of CPPA-G on account of energy supply are Rs 27 billion. After several rounds of reconciliation KE claims their outstanding liabilities stand at Rs 2 billion only. Since, the settlement/reconciliation has not achieved a conclusive agreement on outstanding liabilities Board of Directors of CPPA-G has agreed to file a recovery suit against KE liabilities.
SSGCL has expressed its serious concerns stating that KE is not recognizing SSGC's entire overdue amount as liability in its books of accounts. Therefore, SSGC apprehends that the working of obligation and commitment applicable to KE mentioned in the undertaking of the prospective succeeding company SEP excludes SSGC's outstanding amounts i.e. principal/late payment surcharge. Further, after execution of transaction the majority shareholding will be with SEP which may not be willing to accept the liabilities of KE as per draft Deed of Undertaking.
Minister for Finance, Asad Umar has tasked Prime Minister's Advisor on Commerce, Textile, Industries and Production and Investment, Abdul Razak Dawood, Secretary Privatisation, Secretary Finance, Secretary Power, Secretary Petroleum, Chairman FBR and Auditor General of Pakistan to look into the issue of KE in a holistic manner and submit viable recommendations for their solution to the ECC for consideration by October 25, 2018.
According to sources, PC has examined the issue and is of the view that the issuance of NSC by the PC is governed by the provision 5.3(b) of the original SPA. This clause makes it incumbent upon the KES Power to obtain the seller's (PC) certification that the proposed transfer / transaction does not affect the national security interest of Pakistan and that the SPA signed between KES Power and SEP on October 28, 2016 is a main constituent document of the proposed transfer / transaction.
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