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Who really owns K-Electric?

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1 year ago

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LONDON: In recent times, the complex ownership structure of K-Electric (KE), a pivotal cornerstone of Pakistan’s national security infrastructure, has become a subject of intense scrutiny in relation to the ongoing proceedings at the Cayman Island Court for the full control of utility service.

The ownership structure has come under discussion after it was reported that the majority shareholding of KE has been taken over by Sage Venture Group Ltd, a British Virgin Islands–registered special purpose company wholly owned by AsiaPak Investments Ltd which is owned by businessman and banker Shehryar Chishti.

The businessman, who also owns Daewoo bus service, has said he wants to reform the whole KE system after taking full direct control. However, the original stakeholders have been mulling further legal challenges both inside and outside of Pakistan and the news that Sage Ventures Limited has submitted a winding-up petition of KESP, the immediate parent of KE, in the Cayman Courts has incited resistance by Aljomaih Group of Saudi Arabia and NIG of Kuwait.

So, who really owns the KE that became a global name after it was linked with the now defunct doomed Abraaj and its founder Arif Naqvi?

Evidence shows that in 2005 the Aljomaih Group of Saudi Arabia and National Industries Group (NIG) of Kuwait, through an agreement in collaboration with the Government of Pakistan, attained the lion’s share of KE ownership. This privileged position has persisted to this day, endowing the two entities with a commanding see-through ownership of 30.7% in the company.

In 2008, an exceptional exemption waiver was granted by the Pakistani government for the entry of Abraaj, enabling their entrance into this investment venture. This access was facilitated through a special purpose vehicle domiciled in the Cayman Islands, named as Infrastructure Growth and Capital Fund (IGCF) SPV 21, which boasted over 80 investors brought in by Abraaj as part of the IGCF Fund structure in addition to Abraaj’s proprietary investment, according to records.

In the wake of Abraaj’s liquidation around 2018 after the big scandal, the mantle of managing the firm’s stake, encompassing the interests of Limited Partners (LP) within the IGCF Fund, fell to liquidators and the original shareholders and liquidators started working together to consummate the sale of KE to Shanghai Electric.

However, in 2022, events took a turn when liquidators undertook a series of transactions, effectively transferring their responsibilities to a company freshly incorporated the same year, namely Sage Ventures Limited, owned by Shehryar Chishti and his spouse. The dispute became public when Chishti claimed he possessed the majority stake in KE whereas the original shareholders say that Sage Ventures Limited has acquired only the management of the IGCF Fund and a minority share in the LPs of the Fund, translating to just about 7% of see-through shareholding in KE in comparison to the formidable 30.7% ownership held by the original shareholders.

The original stakeholders say the claim of owning majority stake in KE is unfounded on the basis that acquiring the General Partner (GP) of IGCF as GP ownership merely gives management rights without any economic stake in KE and that the IGCF Fund’s stake in SPV 21 comprises purely non-voting shares.

Adding to the complexity is the existence of distinct share classes, including voting and non-voting shares, in the Cayman Islands. However, an investigation into SPV 21’s actual share register has revealed that the sole proprietor of the voting stock is Abraaj Investment Management Ltd (AIML), which is also currently under liquidation. This raises further questions about the actual ownership of the main company and indicates that there will be hard legal battles ahead.

The original shareholders, possessing 30.7% ownership, along with Mashreq Bank (based out of UAE), an additional significant stakeholder with 10.5% see through ownership in KE, collectively accounts for 41.2% ownership. All these stakeholders have aligned interests. Their shared objective, according to them, revolves around enhancing KE and fostering foreign direct investment (FDI) in Pakistan. The original shareholders have opted not to receive any dividends from KE since 2005, channeling the cash flow back into the company to bolster its capacity and stimulate growth, they say.

Shehryar Chishti told Geo News that “with new ownership and management at IGCF we simply seek to bring focus to improving KE”. 

He said a lot needs to be done at KE and he is aiming to do at KE what has not been done over the last few years. He said his priority would be to deal with the issues of losses, higher cost generation, rising debt and lower quality service.

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It is anticipated that 150 ships would arrive at Gwadar by the year 2045, allowing the port to handle fifty percent of all imports.

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In an effort to strengthen the port’s economic importance, the Federal Government has made the decision to direct fifty percent of all imports from the public sector to Gwadar Port.

By taking this action, which has the backing of the Special Investment Facilitation Council, the port’s financial situation is going to be improved.

The Cabinet will be presented with a summary of imports through Gwadar by the Ministry of Maritime Affairs, which will take place after Prime Minister Shehbaz Sharif’s recent trip to China.

When the next Cabinet Meeting takes place, Ahsan Iqbal, the Federal Minister for Planning, Development, and Special Initiatives, will examine the Chinese offer for the Karachi to Hyderabad Section of the ML-1 Project and bring it to the Cabinet.

Company preparations for the Shanghai International Import Expo, which will take place in November 2024, are being made by the Board of Investment and the Ministry of Commerce of Pakistan.

One of the most important aspects of the China-Pakistan Economic Corridor is the Gwadar port, which serves as a significant commerce route connecting China, the Middle East, Africa, and Europe. At this time, the Gwadar Port is able to accommodate two huge ships, and by the year 2045, it is anticipated that it would be able to handle up to 150 ships.

By developing the Gwadar Port, regional connectivity would be improved, employment will be created, and international investment will be attracted.

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The price of gold in Pakistan has experienced a significant surge.

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Gold prices in Pakistan surged significantly on Thursday following two consecutive days of decline, with the price per tola rising by Rs2,000 to reach Rs262,100. This increase was in accordance with the downward trend in international market values.

The All-Pakistan Gems and Jewellers Sarafa Association (APGJSA) reported that the price of 10 grams of 24-karat gold rose by Rs1,714, reaching Rs224,708.

Conversely, the world gold market experienced an upward trajectory. According to the APGJSA, the global price of gold surged to $2,503 per ounce following a $22 gain during the trading session.

The local market experienced a significant decline in silver prices, decreasing from Rs50 to Rs2,900 per tola after a prolonged period.

The local market’s gold prices remain subject to the ever-changing dynamics of the international market, as well as domestic considerations such as currency exchange rates and domestic demand.

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The government has not met the deadline set by the International Monetary Fund (IMF) for the approval of a $7 billion loan.

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4 days ago

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On Tuesday night, there were virtual talks between representatives of the Finance Ministry and the IMF delegation, with the main topics being external finance and income generation.

According to people familiar with the situation, no date has been set for the IMF’s Executive Board to approve the loan despite the ongoing negotiations.

Officials from the Finance Ministry informed the IMF mission about the government’s initiatives to get outside funding during the discussions. Updates on loan rollovers and fresh finance commitments from allies were included in this. According to sources, the IMF has received a schedule, and loan rollovers are expected to be finished by the end of next week.

The $12 billion in debt must be rolled over before the loan can be approved by the Executive Board, according to the IMF mission.

In the virtual discussions, representatives of the Federal Board of Revenue (FBR) conversed with the IMF team over the revenue deficit. The FBR must reach its revenue goals for this month, according to the IMF mission. As a result, the IMF has asked the FBR to submit a thorough strategy outlining how it will close the gap left by the shortfall and guarantee that revenue goals are reached.

Apart from the conversations on outside funding, there are rumors that the Finance Ministry is actively holding talks with commercial banks in order to obtain new funding. According to reports, negotiations are taking place with four distinct sources for commercial loans, which are anticipated to support the government’s overall financial plan.

Finance Minister Muhammad Aurangzeb disclosed on Tuesday that the IMF was in favor of introducing targeted subsidies. He said that qualifying recipients might receive these subsidies through the Benazir Income Support Programme (BISP).

In order to guarantee consistency, the minister announced that this week’s talks with chief ministers will focus on implementing a similar policy across the country. He was having a casual conversation in parliament with the journalists.

In response to queries about outside funding, Aurangzeb revealed a $2 billion deficit and said that talks to close this gap are progressing. He stressed how crucial it is to obtain business loans.

He went on, “At this point, there’s a need to secure an agreement for commercial loans, not exactly their issuance,” emphasizing that debt rollover negotiations are nearing their conclusion and doing well. The minister expected that these developments would shortly be reported to the governments of allied countries by relevant authorities.

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