August 08, 2007	Wednesday	Rajab 23, 1428

KARACHI, Aug 7: The Aljamaih business group of Saudi Arabia that acquired 73 per cent shares of Karachi Electric Supply Corporation (KESC) in a privatisation deal in mid-2005 is now negotiating a re-sale or transfer of management of the utility with two top Karachi businessmen, one of whom is a well-known stock broker.

The stock broker was also a member of the group that offered bid for the KESC in 2005, but he later decided to opt out.

The other businessman was also a member with the stock broker but not on paper.

The other businessman, a big industrialist, is from one of the 22 top business families of the Ayub era, and is said to be in negotiations with Aljamaih.

He was in partnership with the stock broker when bids were invited for KESC’s privatisation.

The negotiations for re-sale or management change were initially being made through the German multinational engineering company Siemens that is the operating partner of the KESC with Aljamaih.

Siemens is now under severe public criticism for failing to bring any relief to 17 million Karachiites who now endure six to eight hours long power breakdowns and load-shedding almost every day.

Farooq Hasan, leader of the Hasan Associates, who won the KESC bid with Aljamaih as a major partner, said he had no idea if the owners and successful bidders were seeking re-sale or management transfer of the utility.

Farooq Hasan has a token shareholding in the privatised KESC. Those who are in the knowledge of privatisation say that Aljamaih can trade up to 22 per cent of shareholding after three years holding in September 2008. ``But they can share management of the utility on some consideration other than transfer of shares,’’ a source confided.

Captain Haleem Siddiuqi, another token shareholder of the privatised KESC, also expressed ignorance about any fresh deal.

The stock broker, a known player in the privatisation game in Pakistan, says that negotiations for change of KESC management were making some progress and are expected to take some shape in the coming days.

The business group of the stock broker and the industrialist is now weighing pros and cons of the offer given by the Aljamiah and has indicated to make an investment plan of Rs30 billion ($500 million) if the deal goes through.

The group is ready to buy 51 per cent to 60 per cent shares for Rs1.65 a share.

“The KESC is an attractive monopoly utility in a city of 17 million that has all prospects to show growth in industry, trade and in domestic electric consumption in coming years,’’ the stock broker remarked.

The confidence shown by the stock broker on the proposed re-sale of KESC indicates that it enjoys support of the Sindh and federal governments at the top level and all legal hassles and hurdles would be adequately addressed.

“A change of KESC management in coming weeks and instant investment plan of Rs30 billion to refurbish generation, transmission and distribution arrangements would help the ruling coalition parties in Karachi and Islamabad to face people during the election campaign,’’ a local industrialist said.

The KESC privatisation has been through many convulsions from the day it was launched. The deal has seen many ups and downs and many turnings and if the current deal comes through it will be another major shift and deviation from the original rules set for the business.

In February 2005, a Saudi group offered Rs1.65 a share and won the bid for 73 per cent shares at Rs16 billion total cost. But for reasons known to investors, Kanooz al Watan group backed out of the deal. The reference price of one KESC share was said to be Rs1.30.

The Privatisation Commission then asked the second bidder Hasan Associates to match the highest bid. But Aljamiah was not the original partner of Hasan Associates. It joined the group later. A few of the original partners of Hasan Associates opted out. One of these is the stock broker who is now involved in the re-sale deal negotiations.

There were a lot of legal hassles and after obtaining acknowledgements and approval of many business groups, the Privatisation Commission went ahead with endorsing a deal for the Aljamiah group that was with Hasan Associates.

The Karachi Electric Power Supply Company that owns and runs the KESC is registered in tax-free haven Cayman Islands in Caribbean. The ownership of Aljamaih is divided into two entities. One with 60 per cent shareholding is Riyadh-based and the other is its subsidiary with 40 per cent holding registered in tax-free haven Cayman Islands.