Govt gives security clearance to K-Electric deal

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ISLAMABAD: A major hurdle in the way of K-Electric’s sale to Shanghai Electric Power has been removed as the government on Friday gave a security clearance to the company.

A meeting of the Cabinet Committee on Privatization (CCoP) was held on Friday presided over by the Prime Minister Shahid Khaqan Abbasi in which a decision was taken to issue security clearance for proposed sale of K-Electric to a Chinese company, reported an English daily.

During the meeting, this matter regarding the sale of sale of its shares by KES Power Limited in K-Electric Limited to SEP was brought up and it was decided to issue a National Security Certificate subject to ratification by the federal cabinet, as per a government statement.

Also, the meeting discussed several issues linked to the restructuring of Pakistan International Airlines and privatization of Pakistan Steel Mills (PSM).

PIA has suffered colossal losses near Rs145 billion in the last four years and PSM loss in last 10 years amount to roughly Rs188 billion.

CCoP directed the sponsoring divisions to resubmit their recommendations in a comprehensive way taking earlier decisions into consideration in regard to the subject.

K-Electric, majority owned by Abraaj Group divested 66.4 percent of its shareholding in the company to Shanghai Electric Power Company Limited for $1.77 billion in October 2016.

Government shareholding constitutes 24.36 percent stake in K-Electric, foreign shareholders hold 3.09 percent, public 2.69 percent, mutual funds 1.67 percent, public-sector company’s 0.13 percent, financial institutions 1.48 percent and others’ 0.18 percent.

Interestingly, Shanghai Electric Power twice withdrew its bid to acquire K-Electric in last 1.5 years, first was in June 2017 and then on March 26th, 2018 due to regulatory reasons, but the next day it sent a notification to the bourse expressing public interest to acquire 66.4 percent stake in the company.