Kuwait, ME investors eye Pakistan with great interest
Pakistan outlined the existing imbalances in trade agreements that favoured the developed countries and called for restoring confidence in the WTO. Photo: file
Investors of Kuwait and Middle East are looking towards Pakistan with great interest as there is huge potential in the South Asian nation, said Reyadh Edrees, CEO of Kuwait’s multibillion-dollar conglomerate National Industries Group.
“My company has been working with businesses in Pakistan for over two decades and there is huge potential,” stressed Edrees, who was on a visit to Pakistan along with a delegation of majority shareholders of K-Electric.
In an exclusive chat with The Express Tribune, he highlighted the interest of international investors in Pakistan.
“K-Electric’s turnaround from a loss-making entity into a profitable one is a story of sustained optimism and unwavering determination that has set a benchmark for the state-run power entities in the country,” he said.
“If different issues are resolved, it has the potential to start the wave of privatisation for other [power] companies that will change Pakistan’s energy landscape for the better.”
In a series of meetings held on Thursday, the federal government high-ups including Prime Minister Shehbaz Sharif and federal ministers for power and finance assured the delegation of K-Electric’s investors of support in addressing the financial and operational constraints impacting the sale of K-Electric’s shares to Shanghai Electric.
The delegation represented KES Power – the consortium of Saudi and Kuwaiti investors – which holds majority shares in K-Electric, and other Middle Eastern investors.
The delegation, led by Edrees, emphasised its commitment to investing in Karachi and Pakistan.
In response to a question, Edrees told The Express Tribune that since the privatisation of K-Electric in 2005, over $4 billion had been invested to improve Karachi’s power network.
Over the past 16 financial years, K-Electric’s net profit has reached Rs60.5 billion. However, “no dividend has been taken by the investors or shareholders. Instead all money has been reinvested in Karachi’s continued development.”
The delegation shared that such investment had put Pakistan’s power sector on the radar of major strategic investors like Shanghai Electric, which expressed interest in acquiring majority shares in K-Electric back in 2016.
However, the delay of six years in receiving due approvals may damage Pakistan’s image as an investor-friendly destination.
Sources said that in the meetings the government assured K-Electric of its support in finding solutions to the issues.
They added that the delegation expressed concern over the delay in release of tariff differential claims, which the government of Pakistan paid to bridge the gap between the cost of electricity production and the price paid by the electricity consumers under the slab-wise uniform tariff policy.
According to reports, the tariff claims have reached Rs25 billion and are rising continuously amid increasing global prices of furnace oil and liquefied natural gas (LNG).
The delegation said that K-Electric’s financial viability was being threatened due to the delay in release of tariff differential claims, and it was severely impacting its ability to sustain fuel supplies.
In the worst-case scenario, it may result in curtailment of power generation to the detriment of economic and industrial growth envisioned by the government.
Published in The Express Tribune, June 25th, 2022.
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