Shanghai Electric re-initiates intent to acquire K-Electric

Monday's withdrawal by Shanghai Electric Power Company to acquire K-Electric was the second since June 2017

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LAHORE: The Shanghai Electric Power Company Limited in a stock market notification sent through its manager to offer Arif Habib on Tuesday has again expressed public interest to acquire 66.4 percent majority stake in K-Electric.

Following Monday’s notification issued on the bourse which stated Shanghai Electric Power Company Limited was withdrawing its bid to acquire majority shareholding in K-Electric, its officials led by Mr. Wang Yundan, Chairman Shanghai Electric Power (SEP) called on Prime Minister Shahid Khaqan Abbasi in Islamabad on Monday.

SEPCL delegation updated the PM regarding present status of acquisition process of majority stake in K-Electric and requested government’s support in speeding the process of regulatory approval.

PM Abbasi promised the delegation that the government was committed to helping SEPCL with a view to further liberalizing the power generation and distribution sector in Pakistan.

And he provided assurances to the visiting delegation of the government’s commitment to enable the process to move forward contingent to finalization of all regulatory frameworks.

In mid-March, K-Electric had warned delay in clearance of K-Electrics acquisition by Shanghai Electric Power by regulatory authorities would hamper investor confidence.

In a meeting held on March 12th between Abraaj Group’s founder Arif Naqvi with government ministers, he said the federal government had only twelve weeks left to finalize the K-Electric deal.

Although, the federal government demonstrated its conviction in the suggested deal and taken an avid interest in its conclusion taking factors into consideration which could impact Karachi and the country’s power sector on a whole, said Abraaj Group.

Abraaj in its statement two weeks ago said the example set by Shanghai Electric Power, which no doubt was important for Karachi and Pakistan could fuel the government’s aim of privatizing power distribution companies in the longer run.

It added for the deal to be finalized, right tariff determination by the regulator was very important as it would help in promoting an environment of encouraging more investment.

In June 2017, Shanghai Electric Power Company withdrew an offer to buy 66.4 per cent stakes of K-Electric Limited after the power utility failed to secure a national security clearance certificate to complete the transaction.

K-Electric Limited is in the business of generation, transmission, and distribution of electric energy in Pakistan. It supplies electricity to approximately 2.5 million industrial, commercial, agricultural, and residential consumers located primarily in Karachi, and in the towns of Dhabeji and Gharo in Sindh, as well as Hub, Uthal, Vindhar, and Bela in Baluchistan.

The company shares were trading at Rs6.56, up Rs0.24 (+3.80 percent). KSE-100 index was trading at 45,190.30 points, up 106.73 points from close on Monday.

 

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