Chinese Firm’s Investment Plan Creates A Hurdle in Ending KE’s Monopoly in Karachi - Android

The Chinese firm, Shanghai Electric Power (SEP), which has been in talks to buy 64 percent of shares in K-Electric,… Read More

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The Chinese firm, Shanghai Electric Power (SEP), which has been in talks to buy 64 percent of shares in K-Electric, has linked the transaction to the future of exclusivity of the company.

The SEP expressed this in a letter written to the Privatization Commission (PC). Vice Chief Economist, Shi Mingwei, appreciated the commission for a productive meeting with the KE team to address the pending issues. He said that the company is ready to resume dialogues on the following matters through a video link or exchange draft documents and written commitment.

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The letter, however, noted that the SEP will be interested in the transaction only if the future of KE’s exclusivity is ascertained.

We have to make clear that whether KE can maintain its exclusivity right, will heavily affect SEP’s interest to consume this transaction.

Shi Mingwei also sought clarification on the KE’s payables and receivables issue, which, according to him, is ‘very important for this transaction.’

The company expects a transparent settlement for KE’s past dispute and a reciprocity principle to settle future dues.

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The SEP has forwarded a wish list to PC, seeking its comments before proceeding the deal. The conditions are given below:

1. The company seeks the government of Pakistan’s (GoP) commitment not to sell its 24% KE shares following an MTO waiver from SECP.
2. Nepra’s decision on KE’s tariff mid-term review and write off.
3. Since the KE’s current Multi-Year Tariff (MYT) expires in June 2023, the Chinese firm wants details on Nepra’s plan for KE’s future MYT.
4. SEP hopes for a stable long term tariff mechanism for KE.

NEPRA’s Plans for KE

The procedure of selling KE majority shares to Shanghai Electric started in 2016 and has been pending ever since. Over the course of four years, K-Electric has been fined multiple times for negligence, safety issues, excessive load-shedding, and whatnot.

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The company has its monopoly in Karachi – a city over 20 million people, which contributes more than 20 percent to the GDP of the country. In the past few months, it has dodged NAB inquiries, ignored NEPRA notices, and overlooked the Supreme Court orders to end load-shedding in the port city.

To curtail its monopoly, the NEPRA is mulling over revoking K-Electric’s status as the sole authorized power supplier in Karachi by permitting new entries into the market.

The power regulator initiated the process last week, when it held a public hearing on the issue in Karachi, inviting suggestions and proposals for a new system.

The post Chinese Firm’s Investment Plan Creates A Hurdle in Ending KE’s Monopoly in Karachi appeared first on .