Foreign interest: International lenders take equity stakes in KESC

Power utility confirms receiving $50m from IFC and ADB.


Our Correspondent December 21, 2012

KARACHI: World Bank Group finance wing – International Finance Corporation – and the Asian Development Bank (ADB) have bought equity stakes in the Karachi Electric Supply Company (KESC) through subscribing an additional share capital of $50 million by converting their $275 million financing facility to the power utility.

KESC confirmed receiving the investment of $25 million each, from the IFC and the ADB, which now makes these two multilateral agencies, equity holders in the company, says a press statement issued on Thursday.

The direct and immediate impact of the conversion of this loan facility into equity means significant reduction in KESC’s debt, not only translating into greater financial leverage but also substantial savings in terms of financial charges.

According to the loan financing agreement signed by the IFC and the ADB with KESC in 2010, the two international institutions had the right to convert up to $50 million of their debt into equity before December 31, 2012. The debt financing was provided by the two institutions to partly finance KESC’s state-of-the-art efficient power plant, the 560 megawatt (MW) BQPS-II. The 560MW plant had been successfully installed and commissioned by mid of 2012, ahead of its planned schedule.

The encouraging endorsement by the IFC and the ADB is being hailed by KESC as a positive sign paving the way for international investor confidence not only in the utility but also in Pakistan’s economy. KESC said that this latest development is reflective of the confidence these two leading international financial institutions repose in the turnaround progress of the power utility.

Published in The Express Tribune, December 21st, 2012.

COMMENTS (1)

Pakistan needs a Batman | 11 years ago | Reply

Lesson for the rotten SOEs: they can be run efficiently if the govt. stops doling out money, and pulls itself out of the operations.

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