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ISLAMABAD: The federal government has reportedly given the lead role to Minister for Energy, Hammad Azhar in resolution of issues relating to issuance of National Security Certificate (NSC) and other outstanding issues of payables and receivables of Karachi Electric (KE), well-informed sources told Business Recorder.

Earlier, the Economic Coordination Committee (ECC), in its meeting held on May 21, 2021 had constituted a committee under the chairmanship of Minister for Planning, Development and Special Initiatives, Asad Umar.

The sources said, Prime Minister Imran Khan has been apprised that some elements in the Energy Ministry are conniving with businessmen of Karachi to create hurdles in smooth sale of 66.40 per cent shares owned by M/s Abraaj Capital to Chinese company M/s Shanghai Electric Power.

On May 21, 2021, the ECC while considering a summary of Ministry of Privatisation, disapproved the clause "equity and fairness" proposed by KE in the Terms of Reference (ToRs) of Arbitration Agreement on the written advice of Attorney General for Pakistan.

There was a consensus in the ECC on disapproval of equity and fairness clause of ToRs and Attorney General said in writing that “equity and fairness may have consequences which can go against the government or public sector entities/organizations," sources added.

The PC, in its summary had submitted the following proposals: (i) draft Arbitration Agreement to settle the past payables and receivables of KE with Government parties; (ii) Secretaries of Power and Finance Divisions may sign the Arbitration Agreement on behalf of the President of Pakistan ;(iii) policy guidelines may 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 may also advise the GoP to hold inquiry and fix responsibility for the delay in the payment of subsidy; and (iv) Attorney General may submit the draft Arbitration Agreement and future framework before the Supreme Court of Pakistan in pending case of KE and incorporation of directions of Supreme Court, if any, in the proposed scheme.

Once the proposals are approved and implemented, Privatisation Division will initiate the case for issuance of the National Security Certificate (NSC) for the proposed transaction of transfer of shares of KE to SEP.

The Privatisation Division has already agreed in principle on drafts of two other relevant documents which extinguish obligations of GoP to KES Power and contains restrictions on further transfer of KE shares by SEP or it's intermediary companies.

The sources said, it is not a simple issue which is why KE is insisting on inclusion of clause "equity and fairness" in ToRs, the sources said, adding that the Power Division took a position from day one that the country's laws are adequate to sort out matters.

According to sources, stakeholders have reached an agreement over the appointment of former Chief Justice of Pakistan, Tassaduq Hussain Jilani as Arbitrator on settlement of claims of KE and government organisations/entities against each other.

"Whatever decision the arbitrator will finalise, it will be enforced through Islamabad High Court (IHC) and all the parties will be bound to accept it, which is why there is no reason to add the clause that the decision should be on the basis of equity and fairness. The clause of equity and fairness will have consequences which can go in favour or against KE or the government, so why complicate matters further," the sources continued.

SSGC Board of Directors also gave its opinion in writing that the gas utility will not accept the clause of equity and fairness.

SSGC Board, sources said, maintains that it is due Rs 100 billion late payment surcharges (LPS) while OGDCL and PPL have also claimed Rs 100 billion as LPS.

Copyright Business Recorder, 2021

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