KARACHI, Aug 29: A crucial and decisive meeting of the Privatization Commission with the investors group that offered second highest bid for divesture of 73 per cent shares of Karachi Electric Supply Corporation (KESC) is being held on Tuesday at Islamabad.

In the privatization auction of the KESC on February 4, Hassan Associates offered the second highest bid of Rs1.01 per share which comes to over Rs9 billion for 73 per cent shares. The highest bid of Rs1.65 per share or Rs20.24 billion (more than Rs300 million) was offered by Saudi investors group Kanooz Al Watan.

Following Kanooz Al Watan’s initial reluctance to pay the bid amount in face of Privatization Commission’s hectic efforts to keep the transaction on and then final good-bye sometimes in June, the second highest bidder was given the opportunity to match the bid.

Hassan Associates is now said to have been joined by an Arab group — the Riyadh based Aljamaih Holding Company — that is now the main group that will own and manage the KESC in the event of disinvestment. The German multinational giant Siemens is also now part of the group as O&M (Operator and Management) partner.

“The group has agreed to match the highest bid and is positive and serious,” Farooq Hassan informed Dawn on Monday.

Privatization Commission Secretary Tehseen Iqbal talking to Dawn from Islamabad said that the group had obtained no objection certificates from Aljamaih Holding Company and the Siemens.

“The group will formally convey the Privatization Commission on Tuesday of its intention to match the highest bid. Thereafter, the Cabinet Committee on Privatization (CCoP) will meet to consider this offer. In case the CCoP gives consent to the matching offer, the PC is expected to issue letter of acceptance (LoA) within 30 days. After the LoA is issued, the group will have 15 days to make the payment, Tehseen Iqbal said while pointing out the conditions of the original KESC bid.

Sources said that the meeting on Tuesday would consider the mode of payment and all other related issues. The group, according to the market sources, has expressed willingness to pay $100 million that is about one-third of the total payment by next week, after the CCoP gives consent to the transaction and the schedule for remaining amount is expected to be finalized in the meeting.

The meeting was expected to discuss the schedule and mode of investment in the KESC after divestment of its 73pc shares to increase power generation capacity and upgradation of the supply and distribution system.

Total installed capacity of the KESC system is about 1,800 megawatts but actual generation is hardly 1,250 megawatts. The system depends on supply from Wapda and private power operators. From March or April next, the KESC will be directly linked up with Hubco that will add more than 1,000 megawatts and will give the system much needed relief. But this relief is temporary.

Given the political stability, an undisturbed law and order situation and a sympathetic Islamabad, the economic activities in Karachi is bound to increase by leaps and bounds that will demand more electricity and hence the need for more investment for power generation and distribution.

There will also be a need for protection for the new managers of the KESC which the market reports suggest is being sought from Pakistan Rangers. The security will be provided against payment for which the negotiations will be held.