Regulators keep quiet as K-Electric sits on its annual reports for two years

ISLAMABAD: K-Electric (KE) has still yet to issue its annual report for the previous year, fiscal 2016-17, while its major stake is in the final stage. Curiously the state regulators, especially the SECP and NEPRA, have maintained a studied silence on the issue, claim unimpeachable inside sources.

Sources in the power sector informed Pakistan Today that the KE’s annual report for 2016-17 has still not been shared. However, regulatory authorities including National Electric Power Regulatory Authority (NEPRA) and Securities Exchange Commission of Pakistan (SECP) remain unconcerned. They said the last annual report containing the performance of KE was issued in the year 2015-16. Post this, KE has failed to issue its annual reports for the years 2016-17 and the year 2017-18.

The issue of sale of a majority stake (66.4%) held by the Abraaj Group through KES Power in K-Electric to a Chinese company – Shanghai Electric Power – has come to the again as Economic Coordination Committee (ECC) referred the matter to the Cabinet Committee for Privatisation (CCOP) for  final approval , yet  annual report of 2016-17 is awaited, said sources.

Officials at power division on condition of anonymity said that annual report of KE will disclose operational performance including units generated, purchased, sent out, sold and T & D losses and a summary of profit and loss account, summary of balance sheet and summary of cash flow statement etc of the power utility in the year 2016-17. They said the KE is currently faced with heavy financial liabilities which are considered as a key hindrance in the sale of a major stake of Abraaj Group to a Chinese company. One of the key hindrances is the non-payment of about Rs160 billion in dues by K-Electric to the National Transmission and Despatch Company (NTDC) and Sui Southern Gas Company (SSGC), while K-Electric’s audited financial accounts has also remained pending, ostensibly contributing to keeping the $1.77 billion transaction pending for the last two years, said officials.

It has also been learnt through sources that K-Electric had earned Rs32.75 billion in profit in the year 2015-16 and Rs28.32 billion in 2014-15. Thus K-Electric earned an additional Rs4.43 billion in 2015-16. They said K-Electric sold 12,294-kilowatt units per hour in 2014-15 while in 2015-16, the K-Electric sold 12,865 kilowatt per hour – 571 kW per hour additional units of electricity in the year. However, the details of K-Electric’s performance during the year 2016-17 has still not been issued so details of sold units and earned profit is still a mystery for many in the power sector.

It is relevant to mention that earlier Shanghai Electric Power had announced in 2016 that it wanted to acquire the entire 66.4% stake held by the Abraaj Group through KES Power in K-Electric. Shanghai Electric Power initially wanted to acquire the stake through a special purpose vehicle (SPV). But the original agreement did not have a provision to acquire the stake through the SPV. Similarly, the transactions could not be completed apparently because of legal interpretations, and delay in settlement of financial liabilities that have caused a delay in the sale of K-Electric.

A spokesperson of K-Electric was contacted but she chose to ignore repeated phone calls.

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Ahmad Ahmadani
Ahmad Ahmadani
The author is a an investigative journalist at Profit. He can be reached at [email protected].
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