Shanghai Electric To Acquire K Electric This Year
The takeover of K-Electric is being discussed for quite a while where China’s state-owned Shanghai Electric is expected to acquire K-Electric from Dubai-based Abraaj Group which appears to be in a financial crisis.
The acquisition is expected in the second half of 2019 as per media reports. It is important to note that the deal worth USD 1.77 billion was signed back in October 2016 but the implementation has accelerated after NEPRA’s (National Electric Power Regulatory Authority) revision of power tariff upwards by Rs 2.15-3.63 per unit.
In a quote to Express Tribune, Mr Ikram Sehgal admitted to the fact that there had been petty issues which involved K-Electric’s debt and the tariff issue.
What has been a major obstacle in the deal is the legal battle between K-Electric and NEPRA in recent years. Back in 2016, K-Electric and NEPRA witnessed an MYT (Multi-Year Tariff) from 2016 to 2023 where the power regulator had revised down the tariff by Rs 3.50 to Rs 12.07. Two years into MYT and tariffs were revised time and again, the new tariffs issued by Ministry of Energy (Power Division) in May 2019 made the previous ones obsolete.
The MYT tussle between NEPRA and K-Electric caused a delay in the finalisation of profit for the years FY 2017 and 2018.
Recent developments indicate that with the finalisation of profit, #KElectric is all set to increase tariffs by Rs 2.15 per unit for consumers on a consumption scale of 301 to 700 units while the tariff for 700 units and above has been increased by Rs 3.37 per unit and set at Rs 20.70.
The new tariff regime involves certain changes. According to Express Tribune, it involves ToU (Time of Use) billing where eligible customers will be charged according to their consumption in peak and off-peak hours.