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September 22, 2020

KE threatens to move international court if its exclusivity gets eroded

Top Story

September 22, 2020

ISLAMABAD: The top management of K. Electric has threatened in plain words to move international arbitration if Nepra erodes its exclusivity in Karachi which is due to remain till 2023.

And the Nepra impending action will jeopardise Shanghai Electric Power’s acquisition, denying Karachi the benefit of a multi-billion-dollar investment programme and a better quality of living for its citizens. Any action that unfairly and unreasonably results in a premature termination of KE’s exclusivity will likely deter foreign investors from considering Pakistan as an investment destination in the future.

This has been stated in a letter written on September 18, 2020 by Director of KE Board Shan Ashary addressed to Federal Minister for Privatisation Minister Mohammedmian Soomro copied to Prime Minister Imran Khan, Dr Abdul Hafeez Sheikh, Adviser to the Prime Minister on Finance and Revenue Affairs, Asad Umar, Minister for Planning, Development & Special Initiatives, Omar Ayub Khan, Minister for Energy, Nadeem Babar, Special Advisor to the Prime Minister on Petroleum, Shahzad Qasim, Special Advisor to the Prime Minister on Power, Attorney General of Pakistan, Chairman Board of Investment and Registrar, Nepra.

The letter goes on to say that the current Nepra hearings on KE’s properly granted power distribution exclusivity in Karachi are of great concern. The K. Electric asks the federal government to take the necessary measures to address these concerns and ensure that KE and its shareholders’ rights as a critical constituent are respected. KE management disclosed in the letter, saying it is informed that, upon the invitation of the Chief Justice of the Supreme Court, in suo moto proceedings, Nepra is considering prematurely terminating our distribution exclusivity in Karachi, which was due to remain in place until 2023.

This development is extremely concerning as Nepra’s intended early termination of KE’s Distribution License would have disastrous implications. Indeed, it would seriously damage KE’s operational performance and ensure that electricity in poorer segments of the city will be adversely impacted. “It will also severely compromise the value of our investment in Pakistan, which deserves better support in light of the GoP’s stated investment objectives. In addition, please note that Nepra’s anticipated action may have already had a negative impact on KE’s ongoing capex initiatives, including a critical 900MW power project. If the financial close on this project is delayed because of Nepra’s action, we expect a disastrous power situation with severe generation shortfall in Karachi next summer.”