KARACHI, MAR 28 (DNA) – China’s Shanghai Electric Power Company has made a fresh announcement to acquire K-Electric from Dubai-based The Abraaj Group, according to a notice sent to the Pakistan Stock Exchange (PSX) on Tuesday. Earlier, the Chinese state-owned power firm failed twice to secure the required regulatory approvals in the given time due to pending issues in the last one-and-half years.
K-Electric’s share price increased 3.96%, or Rs0.25, to close at Rs6.57. It emerged as Tuesday’s volume leader with 30.27 million shares changing hands.
Pending issues include receipt of the National Security Clearance Certificate, disagreement over who would repay billions of rupees debt on K-Electric’s balance-sheet and getting the power regulatory authority’s approval to increase end-consumer tariff for the next seven-year term.
The National Electric Power Regulatory Authority (Nepra) cut the multi-year tariff by Rs3.5 per unit to Rs12.07 and later marginally revised it upward to Rs12.77. K-Electric did not find the latest tariff suitable and again approached the authority for a review.
“The authority is expected to give its revised verdict on new multi-year tariff any moment, as it finished hearings in December 2017,” .
The two foreign firms reached a deal in the second half of 2016 at a price of $1.77 billion. Some quarters argue that the two international firms may renegotiate the price in case Nepra’s new tariff does not suit the new Chinese strategic investor.
Nepra claimed it took the decision keeping in view new projects announced by K-Electric for the next seven years and downward trend in cost of the projects.
On the contrary, K-Electric continues to demand a higher tariff to have financial space to initiate some unannounced (need-based) projects in those seven years.
The Dubai-based group, in partnership with Al-Jomaih Group of Saudi Arabia and National Industries Group of Kuwait, holds a 66.4% stake in K-Electric through its parent company called KES Power.
K-Electric (KE) Company Secretary Muhammad Rizwan Dalia said in the PSX notice that “K-Electric has received fresh Public Announcement of Intention from Shanghai Electric Power Company to acquire up to 66.40% voting shares of K-Electric Limited…subject to receipt of requisite regulatory and other approvals.”
The 66.40% is equivalent to 18.33 billion shares, according to manager to the offer Arif Habib Limited.