KARACHI: Saudi investors are interested in exploring the substantial but untapped opportunities offered by Pakistan, a senior official of the kingdom’s Al-Jomaih company said earlier this week, though they seek security for their investment and a robust dispute resolution mechanism before penetrating the market.
Al-Jomaih and the National Industries Group (NIG) of Kuwait are part of a consortium that owns majority stakes in K-Electric (KE), Pakistan’s largest privately-owned electricity generation and distribution company that serves Karachi.
Al-Jomaih is one of the largest investors in KE through the consortium that bought out the utility company in 2005 and was the main driver of its privatization.
“Saudi investors are keen and ready to invest in Pakistan to benefit from prevailing huge potential, but they want security and safety of returns on their investment,” Shan Abbas Ashary, the company’s chief investment officer and KE director, told a group of journalists on Monday.
Ashary said his conglomerate was waiting for the approval of a deal that involved handing KE over to China’s state-own Shanghai Electric Power (SEP) company after the sale of 66.4 percent stakes.
The deal awaits the approval of the Pakistan government which has been pending since 2016 due to a longstanding issue of payables and receivables involving various government entities, a deterrent to the conclusion of the sale of Al-Jomaih’s stakes.
He informed the SEP had shown renewed interest in KE by submitting a fresh letter of intent, adding the utility company could attract more investment.
“The SEP had offered $1.77 billion, but after the lapse of many years the offer would be renewed, and we expect that it would go up to $2 billion,” he continued while arguing that substantial improvements in KE’s infrastructure was enough to justify its higher valuation.
Ashary maintained the people and city of Karachi would immensely benefit once the deal was done, as the Chinese investor had capability and expertise to further improve the power sector.
Pakistan set up a Special Investment Facilitation Council (SIFC) — a civil-military hybrid forum — in June to fast-track decision making and promote investment from foreign nations, particularly the Gulf countries.
Ashary said the SIFC in its meeting last week had discussed Al-Jomaih’s issues, but any progress on the matter was still awaited.
“The example of Al-Jomaih is not good for investment in Pakistan,” he continued.
However, he was optimistic that the formation of the investment facilitation forum would help foreign businesses through its one-window operation.
“The SIFC must ensure dispute resolution mechanism, security of investment and repatriation of profits,” Ashary said, adding: “Pakistan should facilitate current investors to set a good example since that will attract more foreign companies.”
