Inside Financial Markets

Federal govt seeks K-Electric’s view over Abraaj exit

The exit plans of K-Electric’s majority stakeholder, Abraaj Group, stirred the Federal Ministry of Water and Power and it has sought official opinion from the company on the ‘sale of K-Electric’, it is learnt.

The Ministry has directed K-Electric to provide its opinion on urgent basis. “K-Electric may furnish its views comments on the matter ‘Sale of K-Electric’ to this ministry on urgent basis,” stated the letter of the Ministry to the CEO of K-Electric.

It should be noted that the Ministry has written to KE in the wake of the KESC-CBA’s letter. The CBA demanded the audit of Abraaj Group from the Federal Ministry of Water and Power saying that the Abraaj Group has caused huge loss to the national exchequer and now it’s planning to leave the country after accumulating billions of rupees. KESC-CBA demanded the government to hold Abraaj Group accountable for outstanding dues worth almost Rs 150 billion.

Fakhar Ahmed, Chief Marketing & Communication Officer, K-Electric, while responding to a query regarding the Ministry’s letter said ‘we have just received the letter and our lawyers will draft a suitable answer and reply soon to the ministry on the asked matter.’

Karachi Business Intelligence (KBI) wing, a group of businessmen, also wrote a letter to the Prime Minister (PM) raising serious questions over probable sale of K-Electric to the Chinese based power utility Shanghai Electric Power’s (SEP).

‘If the SEP regards KE a collateral beneficiary of the China Pakistan Economic Corridor (CPEC), what government of Pakistan sovereign support, implied or otherwise, have been sought and given to incentive SEP to take over management control of KE,’ asked the KBI in the letter.

The KBI added that SEP does not have any managerial experience in the electricity distribution and supply sector as it is basically a power generation company. It is worth adding here that the decision of the Abraaj Group to evaluate the possibility of divesting (directly or indirectly) its shareholding in K-Electric has received strong opposition from the stakeholders.

Consumers, business chambers, employees unions, and general public raised serious reservations over the likely exit of Abraaj group. But the KE has different opinion. Fakhar said ‘when K-Electric offered handsome packages for the employees announcing rightsizing for good governance, then almost 90 percent staff took the option. However few hundreds among 7000 employees refused to attain the opportunity’.

He said K-Electric’s door are still open for them as lucrative golden handshake packages are still viable for them which could be taken any time, but if they don’t want to accept this option the court will decide the matter since the matter is sub-judice.

On the other hand, Chairman CBA rejected Ahmed’s claims saying that the matter of downsizing in KESC was taken to the courts in 2005 while the case didn’t proceed. ‘Now the plans regarding the re-sale of K-Electric have been questioned by the union and this matter has not yet been taken to any court by anyone,’ said Chairman CBA.

Baqar Hussain

A Wannabe CFO, just had stepped in the corporate sector, willing to explore every aspect here and learn as mush as i can, awareness for those who dont, get the info where ever possible and stay up to date always.

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)