KARACHI: There has been a mixed reaction from minority shareholders of K-Electric who have been asked by the National Electric Power Regulatory Authority (Nepra) to send in their objections regarding Shanghai Electric Power Company’s acquisition of the majority stake in the power utility.
KE’s majority stake comprising 66.4pc of total outstanding shares is currently held by KES Power, a sister company of KE incorporated under the laws of Cayman Islands.
After the takeover, Shanghai Electric Power Company with a shareholding of up to 66.4pc will get control of the power utility.
The federal government owns a 24.36pc stake in KE while International Finance Corporation and other shareholders own 0.69pc and 8.55pc shares, respectively. The transfer of ownership requires approval from minority shareholders as well.
In his capacity as general secretary of KE Shareholders’ Association and chief coordinator of KE Consumers’ Forum, Chaudhry Mazhar Ali says several matters need to be settled ahead of the transfer. “I think the transfer is something to be looked forward to in view of KE’s poor performance. Nepra should be looking into certain aspects before allowing a foreign company to control KE,” he told Dawn on Monday.
“KESC was sold in 2005 by the government for Rs16 billion. It is now being sold for Rs184bn. Should the government not be paid taxes on the profit?” he said.
There are also extra bank charges and illegal meter rent that KE should not have charged its consumers, he said. “As per the claw-back mechanism, KE has to refund Rs17bn to its consumers,” he added.
Another outstanding matter that must be settled before the transfer of ownership, Mr Ali said, is the 15-paisa increase in the tariff for excessive labour in the company at the time of its taking over in 2005. “The excessive labour was retrenched by KE in 2011, but the extra tariff is still being charged. Also, KE earned Rs90bn profit in the last four years, but the minority shareholders did not get any dividend. It has been 19 years since they received any dividend. That should also be settled before the sell off,” he said.
Lastly, there are court cases filed by KE against consumers that need to be withdrawn.
Business Intelligence, a group of minority shareholders, has pointed out that KE owes Rs51bn and Rs67bn to the National Transmission and Despatch Company (NTDC) and Sui Southern Gas Company (SSGC), respectively.
It suggested that the Ministry of Petroleum and Natural Resources should negotiate a long-term gas supply agreement with KE on behalf of SSGC to substitute the existing ad hoc arrangement, including the settlement of KE’s Rs67bn liabilities.
Courtesy : Dawn News