Shanghai Electric Power Company of China has revealed their $9 billion investment plan following their acquisition of K-Electric.
K-Electric or Karachi Electric Supply Company will be acquired by Shanghai Electric for $1.77 billion, the biggest ever private acquisition in Pakistan’s private sector.
Shanghai Electric’s plan was discussed at a meeting of the committee made by the Cabinet Committee on Energy. They discussed the transfer of shares of K-Electric to the Chinese power company.
Khawaja Muhammad Asif, Minister of Water and Power lead the meeting. Shahid Khaqan Abbasi, Minister of Petroleum and Natural Resources attended the meeting with Mohammad Zubair and Miftah Ismail, Chairman of Privatization Commission and Chairman of Board of Investment respectively.
The meeting featured discussions amongst stakeholders about how they will improve and add value to the transmission, distribution and generation of power by the power company. Shanghai Electric also shared their company information and international expertise at the meeting.
The government officials welcomed the investment by the Chinese power company while raising a crucial point. They emphasized the need of synchronizing the investment plan with the national goal of eliminating load shedding until 2018 by increasing power generation and developing infrastructure.
K-Electric Chief Marketing and Communication Officer, Syed Fakhar Ahmed, said that the Shanghai Electric shared their investment plan in order to gain regulatory approvals. This was necessary in order to take over management of K-Electric from Abraaj Group (the original owner).
K-Electric has exclusive distribution rights in Karachi and the nearby areas. It serves 2.5 million people in the city.
Abraaj Group’s Input
Abraaj Group acquired the majority stake (66.4%) in the power company back in 2009. According to a statement released by the Abraaj Group,
Operationally, K-Electric has upgraded its installed generation capacity by adding over 1,000 megawatts, with overall efficiency levels improving from 30.4% in 2009 to 37.4% in 2016, thereby significantly contributing to the financial performance of the business.
By 2012, K-Electric recorded a net positive income for the first time since the last 17 years. The company continued to generate positive financial metrics on a year on year basis since then, according to the statement.