By Staff Reporter
ISLAMABAD: President Asif Ali Zardari sought to revive ties with Shanghai Electric Power Co. after the Chinese company scrapped its long-stalled $1.77 billion bid for a controlling stake in K-Electric Ltd., assuring executives that any lingering issues would be addressed as he invited fresh investment in the nation’s power grid.
The overture came during Zardari’s meeting with Shanghai Electric Chairman Wu Lei in Shanghai on Monday, part of a 10-day visit to China. It followed the utility’s announcement last week that it had abandoned the pursuit, blaming a worsening business climate in Pakistan and the seller’s inability to clear regulatory hurdles.
The decision caps a nearly decade-long saga that underscores the challenges of navigating Pakistan’s beleaguered electricity sector, plagued by chronic debt and bureaucratic delays. Shanghai Electric’s board voted to terminate the deal on Sept. 9, 2025, ending a 2016 pact to acquire as much as 66.4% of K-Electric from Abraaj Group.
“On September 9, 2025, the company convened the fifth meeting of the ninth board of directors and reviewed and approved the proposal to terminate and write off the equity acquisition of KE company in Pakistan,” Shanghai Electric said in a statement. “Given that the counterparty has consistently failed to meet the conditions precedent for closing and the changes in the business environment in Pakistan have rendered this transaction no longer aligned with the company’s international development direction, the company has decided to terminate this major asset purchase.”
The company said it complied with all applicable laws and regulations, pointing to the seller’s breach of terms in Article 4.1 of the share purchase agreement, which triggered its right to exit under Article 4.8.
K-Electric, privatized in 2005, is Pakistan’s only publicly traded utility and handles generation, transmission and distribution for Karachi and nearby regions. The targeted 66.4% stake is owned by Cayman Islands-based KES Power Ltd., with the Pakistani government holding 24.36% and the balance split among institutions and retail investors.
KES Power is majority-controlled by another Cayman entity, IGCF SPV21 Ltd., with a 53.8% interest, while Saudi and Kuwaiti investors own the remainder. IGCF SPV21 traces back to Infrastructure and Growth Capital Fund L.P., once overseen by Abraaj Group until its 2019 implosion after the founder’s arrest on charges of fund misappropriation.
During the meeting, Zardari toured Shanghai Electric’s facilities and encouraged the firm to expand its footprint in upgrading Pakistan’s transmission and distribution systems.
“He invited Shanghai Electric to explore further investment in the modernisation of Pakistan’s transmission and distribution network. President Zardari assured Shanghai Electric that any outstanding issues would be resolved amicably and in a spirit of mutual cooperation,” said a statement from the Pakistan Peoples Party.
Zardari also expressed appreciation for Shanghai Electric’s role in bolstering Pakistan’s energy supply, creating jobs and fostering economic growth. He reiterated the government’s pledge to bolster security for Chinese personnel in the country, prompting CEO Lin Jigen to thank Islamabad for safeguards extended to the company’s staff.
Wu provided an overview of Shanghai Electric’s initiatives in Pakistan, spanning Thar coal development, nuclear power and coal-fired generation. Zardari emphasized Islamabad’s priority on advancing the Thar coal project, including coal gasification opportunities.
The session culminated in Zardari witnessing the signing of a memorandum of understanding for a coal gasification plant in Thar. The accord was inked between MFTC Coal Gasification & Manufacturing (Pvt) Ltd. and Sino Sindh Resources (Private) Ltd./Shanghai Electric.
The statement said this was the first coal gasification and fertiliser project based on Thar coal, which would not only contribute to meeting the country’s energy needs but also play a vital role in supporting the agriculture sector.
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