ISLAMABAD: There exists a huge potential for private and foreign direct investment in the power sector value chain including generation, transmission and distribution, said Federal Minister for Planning, Development and Reform Makhdoom Khusro Bakhtiar.
Talking to a delegation led by Shanghai Electric Power Vice Chief Economist Mingwei Shi on Thursday, the minister reaffirmed that the government was committed to resolving the issues affecting viability of the power sector.
Bakhtiar pointed out that under the China-Pakistan Economic Corridor (CPEC), a number of energy projects were being executed and a handful of more schemes were in the pipeline.
Mingwei stressed that Shanghai Electric’s investment to purchase a majority stake in K-Electric was only the beginning and expressed additional interest in the company to expand its investment portfolio in the power sector of Pakistan.
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The minister was briefed about the current status and issues standing in the way of finalising the transaction for the purchase of KES Power’s stake in K-Electric. Mingwei requested the minister to facilitate early completion of the transaction.
Earlier in December 2018, Shanghai Electric Power got a nine-month extension for the acquisition of majority stake in K-Electric from Dubai-based Abraaj Group and had yet to determine the final price at which the long-pending deal would be executed. This marked the fourth time the Chinese firm submitted a public announcement of intention (PAI) to acquire the Karachi-based integrated power company since October 2016.
In October 2016, the Abraaj Group had announced that a deal had been struck at $1.77 billion. Several quarters have speculated a downward revision in the final price after the power-sector regulator made a less-than-expected increase in power tariff for end-consumers.
“The deal may be executed at a 15-20% discount from the earlier price ($1.77 billion) agreed in October 2016,” said an official involved in negotiations on the Shanghai Electric Power and K-Electric deal last year.
However, he dismissed speculation suggesting that the price may go as low as $1 billion. The announcement once again provided nine months to Shanghai Electric Power to get the required approvals, he said.
Published in The Express Tribune, March 29th, 2019.