The minister made the statement on a day Shanghai Electric in a tactical move informed the Pakistan Stock Exchange (PSX) about its decision to withdraw the Public Announcement Intention to acquire 66.4% ordinary share capital of K-Electric Power. PHOTO: FILE
A summary was sent to the competent authority last week about the status of the National Security Clearance Certificate that was to be issued to Shanghai Electric for successful conclusion of the K-Electric deal, said Aziz while talking to The Express Tribune. “We did our job and it is now up to the competent authority to take a decision on the proposed deal between The Abraaj Group and Shanghai Electric Power,” said Aziz.
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The matter has remained pending for the last one-and-a-half years due to different legal interpretations of the proposed transaction and delay in settlement of financial liabilities. The summary that the commission sent to the Prime Minister’s Office also carried divergent views of the privatisation minister and the privatisation secretary, said an official of the Privatisation Commission.
The views of Prime Minister Shahid Khaqan Abbasi and the privatisation minister are almost similar on the matter.
A delegation of Shanghai Electric Power, led by Shanghai Electric Power Chairperson Wang Yundan also called on PM Abbasi in Islamabad on Monday. The delegation apprised the prime minister of the current status of the acquisition process and sought the government’s support in accelerating the process of regulatory approvals.
The prime minister assured the delegation that the government remains committed to supporting Shanghai Electric Power with a view to further liberalising the power generation and distribution sector in the country.
To this extent, he also assured the visiting delegation of the government’s commitment to enable the process to move forward subject to completion of all regulatory frameworks.
In August 2016, The Abraaj Group struck a deal to sell KES Power - the offshore entity that controls 66.4% of K-Electric shares - to China-based Shanghai Electric Power for about $1.77 billion. The deal was contingent upon the settlement of issues between the government and the seller. One of the pending issues was sharing of the Sale Purchase Agreement (SPA) between Abraaj and Shanghai Electric.
The privatisation minister said that there was no need to share the SPA with the Privatisation Commission before the issuance of the National Security Clearance Certificate. He said that the parties can share the SPA with the Securities and Exchange Commission of Pakistan (SECP) after the issuance of the clearance certificate. The minister stressed that the deal was contingent upon the National Security Clearance Certificate and the SPA could be shared afterwards.
But another official of the commission said that the certificate was withheld because of delay in the settlement of financial dues with the Petroleum Division and being unaware of contents of the proposed SPA.
The minister made the statement on a day Shanghai Electric in a tactical move informed the Pakistan Stock Exchange (PSX) about its decision to withdraw the Public Announcement Intention to acquire 66.4% ordinary share capital of K-Electric Power. The company made the announcement on the last day of the expiry of its intention.
A notice sent to the PSX underlined that the “acquirer continues to be fully committed to consummate the transaction pending receipt of regulatory and other approvals”. Shanghai Electric will now make a fresh public announcement of intention in accordance with the prescribed formalities immediately with effect from the expiry date, March 26, it added.
The summary that the Privatisation Commission sent to PM’s Office contained that the proposed SPA should be shared with the government before issuance of the certificate. The Petroleum Division’s liabilities should be settled and The Abraaj Group should give a commitment for the liabilities, said a senior Privatisation Commission official.
The Power Division has already informed the privatisation ministry that it was separately looking at the issue of Rs60 billion worth of dues K-Electric owed the National Transmission and Despatch Company (NTDC) on account of electricity supply cost.
The summary also seeks the federal cabinet’s approval for the National Security Clearance Certificate.
However, the privatisation minister did not agree to these recommendations and his views are separately recorded in the summary by the secretary, said Privatisation Commission officials.
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The privatisation minister said that the acquisition deal has already been delayed and its early conclusion was very critical for Karachi’s future. He said Shanghai Electric has given a firm commitment to invest $9 billion to expand the power generation, supply and distribution network.
The minister said that the National Electric Power Regulatory Authority (Nepra) has also given No Objection Certificate (NoC) for the deal after the due diligence process.
Aziz said that Shanghai Electric has given an undertaking that it will be responsible for all the outstanding liabilities of the K-Electric at the time of acquisition. The minister said that giving a clearance certificate should not be an issue, as Shanghai Electric has already invested in a nuclear power plant.
Published in The Express Tribune, March 27th, 2018.
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