When the Abraaj Group bought the majority of K-Electric’s shares from a Saudi and Kuwaiti consortium in 2009 and took full operational control, it never hid its plan of trying to quickly turn around the utility company’s financial performance and sell it at a profit. It comes as no surprise then that K-Electric will be sold to Shanghai Electric Power for $1.77 billion, which represents a significant profit for the Abraaj Group who paid $361 million to originally acquire the company. Whatever else may be said about the group’s handling of K-Electric, it certainly managed to make it profitable. Before it took over, K-Electric had been languishing in the red for over a decade; it now banks a profit of nearly Rs22 billion a year. In assessing the Abraaj Group’s handling of K-Electric more than profit needs to be taken into account. It claimed to have invested more than a billion dollars into the utility but that money has not been seen in the crumbling power infrastructure. The slightest rain plunges the city into darkness and claims that transmission and distribution losses have been significantly reduced are challenged by experts. It boasted about ending loadshedding in areas where residents paid their bills but that translated into a kind of electricity apartheid where Karachi’s wealthiest areas would receive uninterrupted electricity and others would suffer regular loadshedding.
Shanghai Electric Power, with the experience of providing power to a major urban centre, should be capable of handling K-Electric. But before Nepra approves the sale, it should extract some promises from the new buyer. Shanghai Electric Power needs to promise not to carry out massive layoffs and, unlike the Abraaj Group – which faced labour troubles for its heavy-handed, strong-arm tactics when it tried to downsize – treat K-Electric unions as equal partners. The proposed new owners will also have to invest significant amounts in upgrading the power infrastructure to reduce losses and build up electricity generation capabilities. Right now we are still buying electricity from the national grid and the other provinces keep threatening to cut us off since it increases loadshedding in the rest of the country. As the business capital of Pakistan, Karachi has to be able to generate enough electricity to power itself. Above all, the sale should make the government reconsiders the entire privatisation process. One of the main arguments made in favour of privatisation is that the private sector is more capable of running business than the government. Yet somehow so many of our privatised companies, such as PTCL which was sold to the UAE government-owned Etisalat, seem to end up in the hands of government-owned entities. It’s just that they happen to be foreign governments instead of our own. We can now add K-Electric to that list too. https://www.thenews.com.pk/print/161433-The-KE-deal
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