Shanghai Electric eyes H2 takeover of Abraaj stake in Pak's K-Electric
Arif Naqvi-founded Abraaj holds a 66% stake in the Pakistani power company, which the Chinese firm will take over in H2
China-headquartered Shanghai Electric Power is set to acquire a 66% stake in K-Electric – a Karachi, Sindh-based company – from the Arif Naqvi-founded Abraaj Group in H2 2019, with the deal, which was signed in October 2016 at $1.77bn, reportedly set to be implemented after Pakistan’s National Electric Power Regulatory Authority (Nepra) revised its power tariff upward for consumers.
K-Electric chairman, Ikram Sehgal, called the revised tariff “a major breakthrough”, adding: “Should no hiccup be in the way, [Shanghai Electric] will take over our company by September or October this year.”
A dispute between Nepra and K-Electric on what the tariff should be led to the company not filing any profit or loss statements in 2017 or 2018.
According to a report by local daily The Express Tribune, among the primary issues standing in the way of the deal, apart from Nepra’s tariff, was debt, with the Abraaj subsidiary racking up approximately $850m in liabilities.
The Express Tribune previously reported that secretary of the Pakistani Ministry of Energy's power division, Irfan Ali, said that a mechanism would be needed to sort out the debt issue.
“K-Electric has to pay dues to government departments too,” he explained.