KARACHI: The top official of a consortium that owns majority shares of Karachi Electric said on Monday Saudi investors were satisfied with the outcome of a committee formed by the Pakistani government to resolve regulatory hurdles and issues of payables that have been blocking the sale of the Pakistani utility to Chinese powerhouse Shanghai Electric Power (SEP) for years.
Al-Jomaih Holding Group, one of the largest business groups in Saudi Arabia, bought a 66.4 percent share in KE in 2005 as part of a consortium comprising Al-Jomaih, Abraaj Group and Kuwait’s National Industries Group (NIG). In 2016, the consortium decided to sell the stake to China’s Shanghai Electric Power and submitted an application for a National Security Certificate (NSC) to the Pakistani Privatization Commission. However, the group still awaits approval of the deal due to long-standing issues of regulatory approvals and KE’s liquidity constraints as a consequence of mounting circular debt plaguing the country’s power sector.
In January this year, Shanghai Electric reiterated its commitment to the deal. The government of Pakistan currently owns a 24.4 percent stake in K-Electric, which powers the country’s largest city and commercial hub of Karachi.
Shan Abbas Ashary, the Chief Investment Officer (CIO) of Al-Jomaih and a director at KE, said regulatory hurdles and disputes were being addressed at a “high pace” after the Saudi investment minister wrote a letter to the finance minister of Pakistan in December last year.
“After that, we had several meetings and the SIFC [Special Investment Facilitation Council] took up the matter and created a committee of three ministers,” Ashary told Arab News, referring to a civil-military body set up last year to fast-track foreign investments.
“Thanks to the Pakistani government, and thanks to the support from the Saudi government, this interim [Pakistani] government took it [KE’s issues] very seriously,” he said, adding that out of five key issues, three operational issues had been resolved while a committee had been formed to look into the remaining issues and progress was taking place.
“The outcome is satisfactory for us and I have reported it back to Al-Jomaih Group and they understand it and they appreciate it very much that progress is being made by the Pakistan government.”
He said he hoped the issues would be resolved in “several months not several years” due to the seriousness being accorded to the matter by the SIFC, whose committee comprised the ministers of law, energy and privatization.
When asked if Shanghai Electric, which had offered to purchase shares of KE for $1.7 billion six years ago, would revaluate its offer, the Al Jomaih official said:
“Shanghai Electric has just renewed expression of interest …. They will come back, do a complete due diligence because six years have passed, it’s a long time.”