February 8, 2022 (MLN): The federal government on Tuesday, assured K-Electric investors that it will remove obstacles in the sale of the company’s majority shares to Shanghai Electric Power.
According to Express Tribune, a delegation comprising K-Electric’s board of directors representing Saudi Arabia’s Aljomaih Investments and other Middle Eastern firms met the finance minister.
The delegation gave a briefing on the company’s contribution to Pakistan. Since its privatisation, K-Electric has invested Rs400 billion in the country, sources said, Express Tribune quoted.
K-Electric’s Chairman Shan Ashary informed the meeting that the sale of a majority stake of the company has been stalled by the delay in government approvals. These include the settlement of K-Electric’s payables and receivables, for which the company has agreed to initiate an arbitration process.
K-Electric’s legal team has been engaged in negotiations on an arbitration agreement with officials in the Privatisation Commission, Sui Southern Gas Company and the government of Pakistan. However, final approvals are awaited before proceeding to address the actual systemic issues, he said.
The delegation emphasized that the absence of a governing mechanism coupled with the stalled process threatened to affect the company’s financial viability as it is increasing borrowing to meet working capital requirements.
Minister extended the government’s full cooperation to Mark Skelton, who had recently joined K-Electric’s board and represented foreign investors in the company.
It is important to note that despite several promises made by the government, K-Electric’s key issues, including renewal of power purchase agreement (PPA) between K-Electric and the government of Pakistan, which expired in 2015 and issues pertaining to the gas supply agreement (GSA) between SSGC and K-Electric haven’t been resolved yet which is discouraging for the existing investors.
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