Privatization Commission (PC) has stopped the process of selling K-Electric’s (KE) shares worth $1.7 billion, to Shanghai Electric Power Company Limited (SEPCL), till the time KE clears its dues worth billions to the public sector entities.
Official sources in PC, on the condition of anonymity, told Pakistan Today that the commission (PC) has barred the sale of Abraaj Group’s shares in KE to SEPCL by withholding the National Security Clearance Certificate. They said that the commission will not issue the National Security Clearance Certificate for the sale of Abraaj Group’s 66.4pc stake in the KE to the SEPCL, until the utility company (KE) clears all pending dues of public sector entities. They also said that the commission has, so far, also offered the KE to make these pending dues of public sector entities a part of the sale purchase agreement if it wanted to resolve the matter. “Sale of K-Electric hangs in balance over pending dues,” sources said.
The sources said KE is willing to pay less than Rs50 billion worth of principal amount in installments, however, it is not ready to clear Rs54 billion on account of late payment surcharges to Sui Southern Gas Company (SSGC) Limited and another Rs44 billion to the National Transmission and Despatch Company (NTDC). “Disagreement over pending dues has stopped the process initiated to sale out Abraj Group’s share in KE to SEPCL, sources stated.
It is relevant to mention here that even though investigations on Panama Leaks are underway, two offshore companies have successfully struck two deals worth $1.7 billion in the selling of KE’s shares. However, KE is not a party to this deal as the share-purchase agreement relates to the terms of the proposed transaction between the two offshore entities.
Earlier, in an application to NEPRA, K-Electric requested the authority to authorise/approve and permit K-Electric to recognise the transfer of 66.40pc of the total voting shares from KESPL to SEPCL. The K-Electric said, ‘KES Power Limited (KESPL), a company incorporated under the laws of Cayman Islands, owns 66.40 per cent shares in K-Electric. Now, KESPL has decided to sell the 66.40 pc shareholdings in K-Electric to Shanghai Electric Power Company Limited (SEPCL), which is incorporated under the company laws of People’s Republic of China’.
The K-Electric is interested to hand over its eighteen billion and thirty three crore shares as well as its control to Shanghai Electric Power Company Limited, K-Electric application said.
According to the shareholding structure of the company (K-Electric) as of August 1, 2016, KES Power Limited (KESPL) owns 66.40pc shares, government of Pakistan owns 24.36 pc, and International Finance Corporation (IFC) owns 00.69pc while the remaining 08.55pc is owned by other shareholders.
Sources said that the transfer of shares and handing over the control were not possible without the permission of NEPRA. They said Shanghai Electric Power Company Limited will pay $1.7 billion to KESPL and the K-Electric has submitted the power transmission and distribution plan of Shanghai Electric Power Company Limited to NEPRA, along with an application seeking the transfer of the shareholdings of the company.
The regulatory authority (NEPRA), through a notice sought comments from all the stakeholders, interested/affected as well as the general public on the application of K-Electric regarding the selling of shares.
Reportedly, the SSGC has written a letter to Shanghai Electric Power, cautioning it that if the dues of KE were not cleared before the conclusion of the deal, SSGC would not guarantee the supply of 160 mmcfd gas. Under the sale purchase agreement, SSGC is bound to provide only 10 mmcfd gas, SSGC told Shanghai Electric Power. Moreover, SSGC has also requested the Privatisation Commission to withhold the National Security Clearance Certificate till the time KE clears all outstanding dues. Also, SSGC filed a suit in the Sindh High Court in November 2012, for recovery of its aggregate claim (late payment surcharge) as KE defaulted on late payment surcharge. This amount had been imposed on KE under the directions of the Oil and Gas Regulatory Authority (OGRA).
It is worth mentioning here that influential politicians and businessmen were behind the incident of KE’s sale of shares to KSPL. Even now, some politicians and businessmen are involved in the deal to reap benefits and receive kickbacks through the sale.
Despite repeated attempts, KE’s spokesperson was not available for comments regarding the matter.
