As per sources and news reports K-Electric takeover by Chinese Shanghai Electric is not happening presently. After National Electric Power Regulatory Authority’s (NEPRA) decided to reduce the power company’s multiyear tariff (MYT) by Rs 2.19 from the existing rate, this decision has been made. It is claimed that a cut in MYT has caused a delay in the takeover of KE by the Chinese company.
Sources claimed, “KE’s takeover by Shanghai Electric from Abraaj Group might take more time as certain changes will be made in the agreement, following NEPRA’s decision of reduction in MYT of KE against the demand of the Chinese.”
Abraaj Group in October 2016 announced that KES power has made a deal to give 66.4% share holds in K-electric to Shanghai Electric Power Company Limited for a sum of $1.77 billion.
As per the shareholding breakups government has 24.36% stake in K-Electric, foreign shareholders have a 3.09% stake, local public has 2.69% share, mutual funds form 1.67% shares, financial institutions, insurance Takaful, Modarabas and pension funds hold 1.48% stake, others have 0.18% while public sector firms have 0.13% stake.
Now negotiations are being made between Shanghai Electric and Abraaj Group but the final decision will be made in the next government’s tenure.
Earlier K-Electric wanted to increase the tariff by up to Rs15.57 per unit but NEPRA refused it and decided to fix the tariff at Rs12.07 per unit back in March 2017. In October the tariff was increased to Rs12.7706 per unit in October 2017
K-Electric kept on demanding to further increase the tariff but NEPRA reducted it by Rs2.80 to Rs12.70 per KWh on 1st July 2016.
NEPRA said, “On October 09, 2017, the Authority enhanced the MYT to Rs. 12.7706 per kWh on the account of a revised investment plan, load shedding assumption, T and D losses, heat rates, cost of debt and load growth. KE will carry out planned investments worth Rs.355 billion.”
It is pertinent to mention here that the ex-government of Pakistan Pakistan Muslim League-Nawaz (PML-N) gave security clearance for a proposed sale of the company.
At that time former PM of Pakistan Shahid Khaqan Abbasi said, “In such a scenario, the government will be left with no alternative except dolling out bailout packages for K-Electric in order to ensure the continuous supply of power to Karachi. Hence, there was an urgent need for an early decision by NEPRA on the review request filed by Power Division.”