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ISLAMABAD: The planned sale of 66.40 percent shares of M/s Abraaj Group to Chinese company Shanghai Electric Power (SEP) seems to have hit a major snag.

"Someone in the federal government dealing with K-Electric (KE) affairs has advised Karachi-based businessmen to launch a campaign so that proposed deal between Abraaj Group and SEP cannot materialize," an insider told Business Recorder.

This “campaign” began after a recent meeting of the Economic Coordination Committee (ECC) of the Cabinet constituted an inter-ministerial committee to negotiate with the KE management. Ministry of Privatisation briefed the ECC about the draft Arbitration Agreement to settle past payables and receivables of KE with the government parties. Secretaries of Power and Finance Divisions may sign the Arbitration Agreement on behalf of the President of Pakistan. Policy guidelines will be issued by the Power Division to Nepra, under the Nepra Act 1997, to allow addition of cost of funds in the tariff of an electricity distribution company including KE in case the GoP fails to make payment of any agreed subsidy; and, additionally, if there was no plausible reason for such delay, Nepra will advise the GoP to hold an inquiry and fix responsibility for the delay in the payment of the subsidy. Attorney General may submit the draft Arbitration Agreement and future framework before the Supreme Court of Pakistan in pending case of KE for incorporation of directions of Supreme Court, if any, in the proposed scheme.

During the ensuing discussion, Secretary Power Division drew attention of the forum to the comments of Power Division and requested that the ECC may take into account such comments for consideration.

The ECC encouraged and endorsed the future plan of action as a result of successful negotiation with KE by the Minister for Energy, Minister PD&SI and Power Division. The ECC directed to sign the Power Purchase Agreement (PPA) for future. Agreement on payment of Tariff Differential Subsidy (TDS) may be signed separately. Consequential actions may be completed by the Power Division by May 31, 2021 in order to ensure un-interrupted supply of electricity to Karachi.

Regarding the draft Arbitration Agreement to settle the past payables and receivables of the KE, the ECC constituted a Committee under the convenorship of Minister for Planning, Development & Special Initiatives, Asad Umar, and comprising of Minister for Energy, Hammad Azhar, Secretary, Power Division, Secretary, Petroleum Division, Secretary, Finance Division and Secretary, Privatisation Division. The committee will renegotiate with KE.

Copyright Business Recorder, 2021

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