In a blow that undercuts Islamabad's push for fresh Chinese investment, Shanghai Electric Power has scrapped its long-delayed plan to acquire K-Electric (KE) just days after Prime Minister Shehbaz Sharif returned from Beijing touting renewed economic cooperation.
The Chinese power giant said Pakistan's regulatory bottlenecks and shifting business environment had rendered the $1.77 billion transaction unviable.
Shanghai Electric, a subsidiary of the state-owned Shanghai Electric Group, had been pursuing the acquisition of 18.3 billion shares of K-Electric – representing 66.4% of the company's equity – from KES Power Limited. The deal, valued at $1.77 billion, also carried an additional $270 million in performance-based bonuses depending on the utility's operational outcomes. Despite repeated extensions and negotiations since the agreement was first signed in 2016, the transaction never closed due to regulatory delays, legal disputes, and Pakistan's shifting economic landscape.
On September 9, 2025, Shanghai Electric's board of directors formally approved a resolution to terminate and write off the acquisition plan. The company said Pakistan's evolving regulatory and business environment had left the deal misaligned with its international development strategy. "Given that the counterparty has consistently failed to meet the conditions precedent for closing, and the changes in the business environment in Pakistan, this transaction no longer aligns with the company's international development direction," Shanghai Electric stated in its filing.
The decision ends nearly nine years of uncertainty surrounding one of Pakistan's most closely watched corporate transactions. The withdrawal is seen as a major setback to Islamabad's efforts to attract large-scale Chinese investment at a time of economic strain, casting doubt over its push to deepen ties with Beijing. For years, successive governments had pledged to resolve the regulatory hurdles tied to the deal, but overlapping approvals, unclear compliance requirements, and persistent bottlenecks stalled progress. Analysts say the collapse highlights how indecision and bureaucratic delays continue to undermine Pakistan's ability to deliver on major foreign investment commitments, even with political will at the highest levels.
For now, K-Electric will remain under the ownership of KES Power Limited.
Following the announcement, Shanghai Electric's shares plunged by the daily limit of 10% on the Shanghai Stock Exchange, reflecting investor disappointment over the collapse of the long-pending deal.
K-Electric had achieved several milestones, including reducing losses and improving bill recovery. The National Electric Power Regulatory Authority (Nepra) had also approved a tariff framework that was expected to pave the way for the Shanghai Electric deal. However, the Power Division filed a review petition challenging Nepra's decision, which dealt a major blow to foreign shareholders. K-Electric's foreign shareholders, based in Middle Eastern countries, had repeatedly raised the matter with the government of Pakistan, pressing for resolution of the tariff issue. Despite assurances, they faced setbacks as the Power Division persisted with its petition against Nepra's tariff approval for KE.
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