KARACHI, June 18: A story of the Karachi Electric Supply Corporation (KESC) has forever remained incomplete without the mention of ‘kundaas’. And now it is Kanooz. Until the evening of June 15, people at the Privatization Commission were waiting anxiously for a call from London. It was the final day for Kanooz al Watan —- the party that had made the highest bid of Rs20.24 billion for 73 per cent shares in KESC — to deposit the bid money in National Bank of Pakistan, London. But no one turned up with that bagful of dollars.

The Privatization Commission had invited expressions of interest (EoIs) for the sale of 73 per cent shares from qualified utility operators and strategic investors as far back as in September 2003. Three parties had been pre-qualified. For almost a year, the interested parties conducted due diligence. That ought to have cost them quite heavily in terms of time, energy and perhaps hundreds of thousands of dollars in fees paid to professional firms hired to do the job. A pre-bid conference was duly held on October 7, 2004 and the bidding took place on February 4, 2005.

Two parties were in the run — Kanooz and Hassan Associates. The former won for it made the highest bid at Rs1.65 per share that would make a total of Rs20.24 million for 73 per cent shares. The letter of acceptance was issued to Kanooz on February 20, following which the buyer should have deposited bid money within 14 days, i.e. March 7. When the party did not pay up, extension was granted up to March 20. Yet no money was deposited.

The Privatization Commission secretary dashed to the group’s headquarters in Saudi Arabia and returned with more promises: the price would be paid in two instalments, first on April 30 and second on June 10. The first instalment did not arrive until June 10; more extension of time till June 15. And yet the buyer vanished without a trace.

The mystery of the vanishing bidder remains unresolved. It would be silly to think that Prince Abdul Aziz bin Marteb, the group head and high in the Royal hierarchy, would be short of money. But even then, no one would like his earnest money of $10.6 million, equivalent to Rs100 million, to be forfeited, as it has been, since the buyer failed to fulfil his commitment.

It also makes little sense to believe that Kanooz had no idea that KESC was carrying nearly Rs8.93 billion of “doubtful debts” on its book, much of that due from government departments. The army took over the affairs of KESC in 1999. Major restructuring exercise was conduced in the fiscal year 2002-03, whereby Rs83 billion worth of debt was swapped for equity. Additionally, the utility reduced its capital by Rs57 billion to offset the debris of its staggering accumulated losses. For the first nine months of the current fiscal year (July-March 2004-05), KESC’s looses had increased by Rs1.76 billion to Rs6.75 billion, compared with the corresponding period last year, mainly due to increasing cost of fuel.

One major concern of Kanooz al Watan is being mentioned as that of “billing system”. But those were also said to have been removed by the Privatization Commission. Was Kanooz put-off due to the fact that 33.8 per cent of all the electricity generated by KESC goes missing in transmission and distribution (T&D) losses? Was the utility’s inefficiency due to theft of electricity by the use of ‘kundaas’? If those were so, what kind of due diligence did Kanooz conduct for almost a year? And if it was dissatisfied and thought the utility unworthy of acquisition, why did it bother to go through the entire process to the final stage of making the bid.

Many theories are doing the round. But they are just theories. No one really knows why Kanooz suddenly thought it best to disappear.