KE to undergo corporate restructuring

Sindh govt asks to be taken on board during transfer of ownership


Salman Siddiqui October 04, 2022
K-Electric. PHOTO: FILE

KARACHI:

K-Electric (KE) is expected to have new management over the next four to six-week, as the company goes under corporate restructuring apparently to resolve years’ long pending financial disputes over receivables and payables to the power firm.

“KE is undergoing corporate restructuring and requires four to six weeks for its internal management change to be affected,” reads a notification from the prime minister’s office.

The Sindh government has also asked the federal government to be taken on board with the development to protect the rights of power consumers living in the vicinity of the province.

As per the notification, “KE shall be able to take a definitive position only after the process of corporate restructuring has concluded.”

Recently, China’s state-owned Shanghai Electric Power (SEP) renewed its commitment to acquire K-Electric (KE) from the Middle Eastern investors. Pending financial disputes of billions of rupees on KE books delayed the execution of a sale-purchase agreement for over half a decade.

In June 2022, Prime Minister Shehbaz Sharif formed a task force and designating former prime minister Shahid Khaqan Abbasi as head. The PM also directed the task force to resolve all pending issues in the way of KE’s business deals within three-months.

Reports suggest that the incoming Chinese investors/management, and the outgoing Middle Easter owners, have 66.40% share in KE; both are pressing the government to resolve the outstanding issues as soon as possible to finalise the sale and purchase deal that has been pending for six years.

The notification, said to be from the PM office, was made public by a senior journalist working for a media house in Pakistan.

When the Express Tribune approached an executive at KE, he did not contradict the restructuring of the company. He did, however, say that the old management continues to remain in place to date (Monday).

The company’s official response was awaited till the filing of the story.

Sindh Energy Minister Imtiaz Shaikh said in a statement that systematic consultation with the Sindh government was very important at the time of any decision regarding KE.

Reacting to the news regarding the reports of transferring ownership/shares of the KE to another company, Shaikh said in a statement that the provincial government would protect the constitutional rights of the people of Karachi in the matter.”

He added that the provincial government was monitoring the situation and following the reports of the transfer of ownership of the power utility to another company. “We have decided that the federal government will be approached through a letter in this regard,” he added.

The energy minister reiterated that the provincial government will ensure it is consulted at the time of any decision regarding the future of KE.

The minister further claimed that there were apprehensions that the interests of the people would be affected if a unilateral decision were taken regarding the transfer of ownership of the utility.

“The Sindh government will ensure protection of the interests of the citizens of its province, especially Karachi, according to the constitution and law,” he added.

Some six-year ago, Shanghai Electric Power (SEP) agreed to acquire 66.40% shares in KE from the existing ME investors in the Karachi-based power company for $1.77 billion in October 2016.

The corporate restructuring of the company could affect the company’s old price. Accordingly, the SEP may re-evaluate and offer a new price to the outgoing shareholders.

Published in The Express Tribune, October 4th, 2022.

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