Chinese investment in K-electric
Acountry’s FTER committing about $36b dollars investment in the
power sector under China-Pakistan Economic Corridor Project, China has come up with another substantial investment by deciding to purchase stakes worth $1.77b in K-electric. Abraaj Group, which currently owns the K-electric announced on Saturday that the stakes will be sold out to China’s State-backed Shangahi Electric Power. It is hoped the deal, being dubbed as one of the largest private transactions in the country, would not only attract more foreign investment in the power sector but also help end woes of the people of Karachi who are frequently exposed to prolonged and unannounced outages.
K-electric, formerly known as Karachi Electric Supply Company, was privatised back in 2005 and later the Abraaj Group took majority stakes of the company in 2009. At the time of its privatisation it was expected that transaction would help steer the company out of huge losses and that the buyer would also invest sufficient amount to enhance generation capacity to meet the growing power requirements of the metropolis. Despite the commitments made in the contract, the company’s owner did not fulfil its obligations vis-à-vis enhancing power generation and improving the transmission system. All this only added to woes of the people of Karachi who were exposed to prolonged and unannounced power outages. The company’s failure to generate sufficient energy only forced successive governments to intervene and supply electricity to the company in order to provide some relief to people of Karachi. In our view, divesting of major stakes to Shangahi electric company, which has a vast experience in the energy sector and achieved major breakthroughs in power generation and transmission, would help change the fortunes of K-electric not only to generate adequate electricity for its millions of consumers in Karachi but also inject additional electricity to national grid for usage by people in other cities as well.