ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Tuesday asked K-Electric to produce its agreement with China’s Shanghai Electric Power (SEP) along with its future roadmap regarding 650MW power supply from national grid and payable gas dues.

Informed sources said the managements of Abraaj Group-led KE and SEP of China had a meeting with Nepra chairman and members of the power regulator for conclusion of regulatory approvals leading to transfer of the Karachi-based integrated power utility.

Sources said the KE management showed its reluctance to share the transfer agreement saying it was a ‘secret document’ that was also not shared with two other regulators – the Securities and Exchange Commission of Pakistan (SECP) and Competition Commission of Pakistan (CCP). It said the two regulators were provided with a certificate of responsibility.

The regulator assured the delegation that it would ensure ‘complete secrecy’ and would guarantee it remained secret for all times, the sources added.

However, Nepra made it clear that being a frontline regulator of the power sector it had to make sure nothing went against the interest of two key stakeholders – the government and the consumers – in future.

Secondly, the regulator also inquired about the settlement plan for Rs52 billion dues to the Sui Southern Gas Company Limited (SSGC). The private delegation, these sources said, explained that the new buyer would take over the liabilities.

Thirdly, Nepra also raised questions over the future course of action regarding 650MW power supply from the national grid. It asked the managements of Abraaj and SEP that documentary evidence along with written explanations on these three issues would enable the regulator to proceed with the regulatory approval.

The CCP had cleared SEP to take over a majority stake in KE from Dubai-based Abraaj Group on the basis of its competition assessment that the transaction did not have potential to create monopoly to the consumer’s disadvantage. Matters relating to electricity sale, laws and tariff pertained to power sector regulator Nepra and required its approval. Corporate regulatory clearance has already been given by corporate watchdog – SECP.

Abraaj Group announced in the last week of October, 2016 that one of its companies, KES Power, would divest its 66.4 per cent shares in K-Electric, the country’s largest and only vertically integrated power utility, at $1.77 billion to SEP.

SEP has been holding behind-the-scenes talks with the government and its various institutions since then for commercial and regulatory approvals. The Chinese company has already offered to the government an investment of $9bn investment for the system upgrade of K-Electric.

The government agreed to continue 650MW electric supply from the national grid to Karachi, provided the existing majority owner of KE cleared Rs138bn liabilities.

The proposed $9bn business plan stretched until 2030 chiefly for generation sector and also in the transmission and distribution network.

Published in Dawn, February 15th, 2017