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The Abraaj Group on Sunday announced that a $1.77 billion stake in K-Electric will be sold to China’s state-backed Shanghai Electric Power (SEP).
The Abraaj Group boasted that the company has undertaken one of the largest private sector transactions in the country.
"Upon completion, this will be one of the largest private sector transactions in Pakistan and represent one of the global power industry’s most well-recognised operational turnaround stories," said a press release issued by the Abraaj Group.
The Abraaj Group has entered into "a definitive agreement to divest its stake in K-Electric to Shanghai Power Company for $1.77bn," the statement said.
Chairman of SEP Wang Yundan said, "SEP appreciates what Abraaj has achieved at K-Electric over the past seven years and recognises the performance and capability of K-Electric’s management team."
"SEP will leverage its own strengths as a strategic investor and further realise K-Electric’s potential to provide better services to the people of Pakistan and the Government of Pakistan. SEP is confident about working together with Abraaj in the future to transform K-Electric into one of the best companies in Pakistan."
Commenting on the exit, Abraaj Group Founder and Group Chief Executive Arif Naqvi said, "Today marks a milestone... as we enter into a definitive agreement to divest our stake in a high-performance business as market leader to a strategic buyer who is fully committed to continuing this success story into the future."
K-Electric serves 2.5 million consumers in and around Karachi. The company, formerly known as the Karachi Electric Supply Company, was incorporated in 1913 and is a publicly listed fully integrated power utility involved in generation, transmission and distribution. The company was privatised in 2005 and Abraaj took a majority stake in 2009 through its funds, the statement said.
Shanghai Electric Power, a subsidiary of the State Power Investment Corporation of China, is engaged in the generation and transmission of electricity, and the operation and maintenance business in the energy service sector, it said.
Read more: Editorial — Chinese interest in K-Electric
Read more
On DawnNews
Comments (60) Closed
Oct 30, 2016 05:17pm
It just the beginning East China Company will take over everything
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Oct 30, 2016 05:20pm
I hope KE's current management at high level do not get a lot of changes, as they are doing great work.
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Oct 30, 2016 05:21pm
Bravo. At least now there will be progress in this sector and the new Chinese company will revamp the aging electric poles and transmission wires. My expectation through this agreement is also to increase power production and increased mega watts, Best of luck.
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Oct 30, 2016 05:29pm
@chander perfectly named my friend.but who will be Bahadur Shah
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Oct 30, 2016 05:30pm
Definitely service will improve but the cost will be higher. Good luck
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Oct 30, 2016 05:33pm
This is Pakistan personal matter . I have no idea why our Indian fans so much worried about this project . We want investment . Thank you
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Oct 30, 2016 05:33pm
This is Pakistan personal matter . I have no idea why our Indian fans so much worried about this project . We want investment . Thank you
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Oct 30, 2016 05:34pm
@Chander - Abraaj Group too is a Dubai company. In many countries many banks, industries, power and water companies etc are owned by foreign investors.
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Oct 30, 2016 05:36pm
@chander thats ok dont worry about it :)
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Oct 30, 2016 05:37pm
Abraaj already made billions through copper sale.
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Oct 30, 2016 05:47pm
Will the electricity prices and unnecessary billing heads go down or not in Karachi. That's the real test.
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Oct 30, 2016 05:50pm
It is not good for pakistan. Now for making profit they will rise tarrif as they are investing for profit not for charity.
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Oct 30, 2016 05:51pm
prepare for privatisation of every institute in Pakistan and then tax hike !!
Good Luck to us !
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Oct 30, 2016 06:01pm
If it's reduced the cost of electricity and stop the theft then no issue.
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Oct 30, 2016 06:05pm
Abraaj is owned by Indians through shell investments. Did anyone know that?
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Oct 30, 2016 06:30pm
@Liberal Overseas i don't know what any of it means..sorry.
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Oct 30, 2016 06:40pm
@Ravan Well you know it. Isn't that enough mate!!
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Oct 30, 2016 06:47pm
@chander The Abraaj Group is an investor operating in the growth markets of Africa, Asia, Latin America, Middle East and Turkey. Founded in 2002 by Arif Naqvi, the group has over 20 offices spread across five regional hubs in Istanbul, Mexico City, Dubai, Nairobi and Singapore. Abraaj currently manages c.US$10 billion in assets globally .Hence there need not be a panic
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Oct 30, 2016 06:53pm
@Muhammad Iqbal Before Bahadur Shah identity Mir Kasim and Jafars amongst you.
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Oct 30, 2016 07:06pm
Can Chinese fix the electricity distribution problems? Only time will tell.
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Oct 30, 2016 07:19pm
Will the electric company be able to get customers to pay their bills so that the Chinese will receive their receivables or will government offices fail to pay?
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Oct 30, 2016 07:20pm
@Ravan Arif Naqvi the founder and CEO is from Karachi and a good friend.
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Oct 30, 2016 07:25pm
@Ravan Owner Arif Naqvi is a Pakistani.Nice try.
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Oct 30, 2016 07:34pm
"K-Electric serves 2.5 million consumers in and around Karachi"Shouldn't this be 25 million instead?
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Oct 30, 2016 07:35pm
Now , we should start learning and teaching Chinese in our schools.Chinese food is healthy and so are the movies.
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Oct 30, 2016 07:48pm
Indians showing so much concern for Pakistan! So endearing.
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Oct 30, 2016 08:24pm
That is the proof of negilgence going on in this country thru inept leaders and uneducated staff. More is to come soon.
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Oct 30, 2016 08:42pm
K electric has been a bloodsucker of Hundreds of Karachiites. I hope this takeover will result in the abolition of:
1) Over billing (even my own apartment that has been closed for months gets a bill of thousands...as they bill you on a 'suspicion' of stealing electricity.
2) Unfair power-cut policy should also be improved. If certain houses or shopkeepers are stealing electricity, the residents of that area should not made to suffer. It's the company's responsibility to control electricity theft and ensure proper billing.
I welcome it as a good news. Fingers crossed!
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Oct 30, 2016 08:54pm
Slowly but surely East China company is on it's way. Wake up before it's too late.
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Oct 30, 2016 09:01pm
surprised to see 2.5M consumers.. we heard about 20M karachi popoulation.. I dont think average household is 8 person ... or is it due to kunda system.. :)
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Oct 30, 2016 09:19pm
@chander Abraj is also an outsider.
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Oct 30, 2016 09:20pm
And now the Sindh Govt will not have any option to condemn the K Electric. A good decision by Abraaj.
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Oct 30, 2016 09:22pm
There is no transparency in this and all other projects. In real world such projects are secrutinized in open discussions so people can see pro and cons. People can ill effort high price of electricity. Present government has no clue they have no plan just shooting in the dark. To score political point just announcing a big project as NS just did Kohat is laughable.
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Oct 30, 2016 09:24pm
@fahad China is going to control to put pressure on India nothing else.
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Oct 30, 2016 09:25pm
China is our best friend.We welcome their investments in Pakistan.
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Oct 30, 2016 09:26pm
@fahd: they will not answer such questions. Of course electricity prices will go up. Poor can only effort one 40 watts bulb in their homes.
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Oct 30, 2016 10:01pm
Excellent Move
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Oct 30, 2016 10:16pm
@Ravan Abraaj is based in Dubai and owned by a Pakistani.
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Oct 30, 2016 10:21pm
It is only a friendly advice
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Oct 30, 2016 10:59pm
I am shocked to read that K-Electric has only 2.5 million customers as it is mentioned in the article . KHI has over 20 Million residents ! Imagine if even half become legal K-electric customers ! It is a sad reflection of society .
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Oct 30, 2016 11:21pm
@fahad let me clarify something. Indians do not care about pakistan ever. We trust you guys will take care of yourself.
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Oct 30, 2016 11:26pm
@Ravan really! Great!
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Oct 31, 2016 12:00am
@Farzana He is talking about investment. Naqvi is founder of company but from where most of investment come for this company?
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Oct 31, 2016 12:18am
@Ravan If K electric is actually owned by India then present deal is better because China is our trust worthy friend and we expect better result and beneficial for people of Karachi
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Oct 31, 2016 12:45am
We thank Shanghai Electric Power (SEP) for investing $1.77 billion in K-Electric. This shows China's confidence in Pakistan and commitment to help. China is an incredible global economic success story. Pakistan must benefit from its vast experience and extraordinary achievement. Long live Pakistan-China friendship.
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Oct 31, 2016 12:46am
@chander just like US will take over similar industries in India. Look within your own, not at others.
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Oct 31, 2016 02:09am
Next generations will be paying for this.
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Oct 31, 2016 03:07am
What Arbaaj Group see in the prism that ordinary citizens do not see?
Are the Chinese confident of making money from KEC through integration of CPEC power projects? Will they form a national grid, connecting KEC with consequent positive and negative consequences?
Is Arbaaj group seeing an opportunity to get out of Pakistan and find an investment avenue somewhere else in the world, away from turbulent Pakistan?
It is a glass half full, half empty analogy?
In depth risk-reward benefit study has to be done, with age of the infrastructure (of 1913), investment made over a period in rehabilitation, political certainty.....
From an investors point of view, for now I see this is a good exit strategy for Arbaaz group and an opportunity for the Chinese to have strategic 'Hold' over 'Strategic product' and thereby 'Strategic LEVERAGE' over Pakistan government (of whosoever and whatever type).
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Oct 31, 2016 04:41am
Future generations will be paying the price.
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Oct 31, 2016 04:49am
@fahd Have you looked into the rate fixed for solar power (FYI Rs14/unit)
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Oct 31, 2016 05:12am
It appears that the owner group had sold the entire company for $1.77B. The Chinese company is partly owned by the state. The Chinese company sees a great potential for the company with its power generation, distribution and networking system. The buyer company has lot of experince in this field.The company will bring new technology to minimize the power outages, setup underground cables,stream line its operations including latest meters which will stop the theft of electricity. New investments in the company will require a rate hike and consumers will see an increase in theit electric bills.This will be a role model to WAPDA to clean up its act.
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Oct 31, 2016 05:49am
@Farzana Arif Naqvi is the founder CEO. However Abraaj has Indians and other foreign nationals on board. While Abraaj has invested in many projects in India, K-Electric was their only investment in Pakistan.
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Oct 31, 2016 07:17am
China will give u low rates ??
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Oct 31, 2016 07:18am
Railway, Steel Mill and PIA are also need such changes..
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Oct 31, 2016 07:36am
Might be the biggest transaction on this soil, but I suspect the money so going to go out as fast as it comes in, if it reaches our shores at all. So don't really know what all the fuss is about.
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Oct 31, 2016 09:19am
K-Electric should also look into powering the street light poles by solar energy and save on wattage.
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Oct 31, 2016 09:31am
@Sukhera K-Electric acquisition would be Shanghai Electric Power’s biggest overseas purchase, after $399 million deal for Maltese utility co in 2014
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Oct 31, 2016 10:52am
People comparing total Karachi population to KE consumers need to realize two facts:
1. A household consisting of multiple persons is considered a single consumer.
2. Not all households in Karachi have been blessed with electricity. For example, slumps and other kachi abaadis which make up a huge portion of Karachi's total population.
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Oct 31, 2016 11:20am
K-Electric sucks big time, for over a year I am trying to get meters installed in my building to no avail. I welcome the transaction hoping that it will be good for the customer and the city.
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Nov 01, 2016 11:22am
Government must think before selling k electric is it useful for the people of Karachi or not we are already in worries about the high billing and theft problem price of electricity must be low think about the poor people
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