Finance Minister, Shaukat Tarin, assured the K-Electric’s investors that all the obstacles in the way of the sale of K-Electric’s majority shares to Shanghai Electric Power (SHA) will be addressed.
The Express Tribune reported that a meeting was held between the K-Electric’s board of directors and the Finance Minister, in which the board of the company was representing Saudi Arabia’s Aljomaih Investments and other Middle Eastern firms.
During the meeting, the company gave a briefing regarding its contribution to Pakistan, and it was revealed that the company has invested a total of Rs. 400 billion since its privatization.
K-Electric Chairman, Shan Ashary, told the meeting that the sale of K-Electric’s shares to SHA has been delayed due to a delay in government approvals. These include the settlement of payables and receivables of the company, for which K-Electric has agreed to start an arbitration process. The legal teams of the company have also started the negotiations on the arbitration process with the Privatization Commission (PC), Sui Southern Gas Company (SSGC), and the government of Pakistan. However, the final approvals have not been given yet by the authorities.
The delegation highlighted that the absence of a governing mechanism and the postponement of the process haD put the company’s financial viability at a risk.
In return, Shaukat Tarin assured full government cooperation to Mark Skelton, who is a recent member of the company’s boards and represents foreign investors in the company.
It is to be noted that despite the promises made by the government, several processes are still being stalled, which include the renewal of a power purchase agreement (PPA) between K-Electric and the government of Pakistan which expired in 2015, and issues regarding gas supply agreement (GSA) between SSGC and the power utility also remain unresolved to date.
At this stage, investment in the power sector is crucial to the liberalization of the electricity market. Therefore, the government must act fast to resolve the issues of K-Electric.
