It seems that the settlement of financial claims between the government entities and Abraaj Group is complicating the process of transferring shares of K-Electric (KE) to Shanghai Electric Power. It is reported that the Shanghai Electric Power has not been issued the National Security Clearance Certificate, which the company needs to purchase Abraaj Group’s 66.4% stake in KE.
Reports indicate that KE is reluctant to pay the dues of approximately $1 billion to the government and has asked the concerned authorities to write-off such dues. K-Electric is claiming that it failed to timely pay the dues because of the delays in payments of electricity charges by many government organizations. Moreover, KE claims that the government has not completely paid the electricity subsidies as promised.
Officials of Karachi Electric held a meeting on Wednesday with the Finance Minister Ishaq Dar and Water and Power Minister Khawaja Asif in a bid to resolve this issue.
“KEL delegation briefed the minister on the status of payables and receivables of K-Electric with regard to various government entities and suggested ways to resolve the pending issues”, according to a handout issued by the finance ministry.
As per the sources, KE wanted to pay only the principal amount, which is less than PKR 50 billion, that too in installments. KE does not want to pay PKR 54 billion to Sui Southern Gas Company (SSGC) and PKR 44 billion to the National Tariff and Dispatch Company (NTDC) on account of late payment surcharges.
The recent stance made by KE has put SSGC in an awkward position since it has already cut gas supply to Pakistan Steel Mills (PSM) because of the outstanding dues. Moreover, SSGC has sent a letter to Shanghai Electric Power, cautioning the company that if the dues are not cleared before the conclusion of the deal, the company cannot guarantee the supply of 160 mmcfd gas.