ISLAMABAD: M/s Shanghai Electric Power (SEP) has resubmitted an expression to acquire 66.40 percent ordinary share capital of Karachi Electric (KE) Limited, just a day after withdrawal of public announcement of intention to acquire shares.

Arif Habib, Chief Executive of Arif Habib Group told Business Recorder that SEP wrote a letter on June 2017 that they are withdrawing its public announcement of intention to acquire 66.40 percent ordinary share capital of KE due to legal compulsions but resubmitted their intention letter on June 14, 2017.

Elaborating on the technical and legal modus operandi, Arif Habib said that whenever such kind of interest is shown, the transaction has to be completed within 90 days (three months). This time period had expired. Provision of 90-day extension is also available in the law which expired on June 13, 2017.

According to him, there is no provision of another extension in the law beyond 90-day extension.

“On June 13, SEP gave notice of withdrawal of expression but yesterday the company again submitted its letter of expression,” he said. This expression will be effective for 30 days.

On August 30, 2016, SEP had publicly announced its intention to directly or indirectly acquire up to 18,335,542,678 ordinary shares of KE representing 66.40 percent of the total share capital of the target company subject to receipt of regulatory and other approvals (transactions).

Arif Habib Limited, as Manager, informed the SECP and PSE and Chief Executive Officer (CEO) KE that the time period for making the public announcement of offer ( as extended by the SECP) will lapse as of June 30, 2016 on the basis that certain regulatory and other approvals for the transaction remain outstanding.

M/s SEP would acquire 66.4 per cent stake in K-Electric for $1.77 billion and the authorities hope that the company would immediately invest $1.7 billion to upgrade the distribution and transmission system.

According to sources, the Chinese company has set a condition that GoP would not divest its 24 per cent shares but this condition was not acceptable to Islamabad.

Ministry of Water and Power is also hesitant to give Implementation Letter (IA) despite “cordial relations” between Water and Power Minister Khawaja Asif and Naqvi of Abraaj Group of Dubai.

The sources said, KE’s team is doing the rounds of various ministries almost daily with the request to expedite their case but the concerned officials argue that they cannot over-extend their powers to facilitate the transaction.

One of the key issues between the federal government and KE management is clearance of dues amounting to around Rs 90 billion.

Since KE did not regularly clear its bill for 650MW electricity to the Central Power Purchasing Agency (CPPA) the federal government has decided that Standby Letter of Credit (SBLC) mechanism should be implemented and the delay in payment by the KE be subject to Kibor plus 300 basis points.—MUSHTAQ GHUMMAN