ISLAMABAD: Shanghai Electric Power Company of China has outlined a $9-billion investment plan following acquisition of shares and management control of K-Electric – the power utility that supplies electricity to the country’s largest city, Karachi.
The plan was unveiled in a high-level meeting of a committee constituted by the Cabinet Committee on Energy for deliberating on K-Electric’s share transfer.
Shanghai Electric Power expresses intention to acquire K-Electric
Minister of Water and Power Khawaja Muhammad Asif chaired the meeting, which was attended by Minister of Petroleum and Natural Resources Shahid Khaqan Abbasi, Privatisation Commission Chairman Mohammad Zubair and Board of Investment Chairman Miftah Ismail.
In the business plan, Shanghai Electric along with K-Electric management highlighted how they would improve and add value to the power utility’s infrastructure including transmission, distribution and generation systems.
Shanghai Electric, a state-owned company and a big name in China’s power industry, also shared its profile and international expertise. It is controlled by State Power Investment Corporation, a Fortune 500 company. Listed on the Shanghai Stock Exchange, it is mainly responsible for power supply to Shanghai.
While welcoming the planned investment, government officials underscored the need for K-Electric to synchronise its investment plan for further developing infrastructure and generation facilities with the national endeavours aimed at minimising and eliminating load-shedding from the country by 2018.
Government high-ups also assured K-Electric of their support to efforts for improvement in service quality and increase in power supply to the consumers.
Talking to The Express Tribune, K-Electric Chief Marketing and Communication Officer Syed Fakhar Ahmed said the submission of Shanghai Electric’s investment plan was part of the steps required to be taken for winning regulatory approvals, which were needed before the Chinese company took over management control of K-Electric from the Abraaj Group of Dubai.
“Recent disclosure of developments at the Pakistan Stock Exchange (PSX) is the only source of information for K-Electric about the ongoing takeover process, which is better known to the Abraaj Group and the government,” he said.
“The company will engage in direct interaction with Shanghai Electric once it takes over,” he said.
At the PSX, K-Electric’s stock price rose 18 paisa to close at Rs9.41 with a volume of 22.8 million shares on Tuesday.
About a month ago, Shanghai Electric had announced that it had reached an agreement with the Abraaj Group to take control of K-Electric for a price of $1.77 billion, the largest transaction in the history of Pakistan’s private sector.
K-Electric has exclusive distribution rights for Karachi and its adjoining areas, serving some 2.5 million consumers.
In a statement issued by the Abraaj Group, Shanghai Electric Chairman Wang Yundan was quoted as saying: “SEP (Shanghai Electric Power) will leverage its own strengths as a strategic investor and further realise K-Electric’s potential to provide better services to the people and government of Pakistan.”
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The Abraaj Group owned 66.4% stake in K-Electric via its parent company, KES Power. The power firm was privatised in 2005. The venture capital group took the majority stake in 2009 through its funds.
Under its seven years of management, the electric firm “has successfully achieved a landmark turnaround. Operationally, K-Electric has upgraded its installed generation capacity by adding over 1,000 megawatts with overall efficiency levels improving from 30.4% in 2009 to 37.4% in 2016, thereby significantly contributing to the financial performance of the business,” said the statement.
“The company was successful in reducing transmission and distribution losses by over 12 percentage points. K-Electric additionally focused on enhancing the reliability of the transmission network through the addition of 12 new grid stations and by augmenting old and building new power lines which resulted in increased transmission capacity of 768 MVA.
“In 2012, K-Electric recorded a net positive income for the first time in 17 years and since then has continued to generate positive financial metrics on a year-on-year basis and demonstrated sustained growth,” it added.
courtesy: Express Tribune