- Sources say govt trying to bring down KE’s share value for taking over company while KE is likely to announce 15pc profit to its small shareholders to improve share value
Following the government’s recent actions against K-Electric, the company has started hunting for investors to sell its shares before KE’s share value goes down, Pakistan Today has learnt.
A KE official told Pakistan Today that the “government is planning to bring down the KE share value in order to take over the company”. He claimed that the government is taking “unnecessary actions” to declare Abraaj Capital as a failed power generator and distribution company.
The official accused the government of trying to bring the KE share value to Rs 3 from Rs 8 by running a “baseless campaign”. He maintained that the government was trying to “impact negatively the sentiments of foreign investors” who have invested in KE and those who are willing to invest in the power utility. He revealed that the company has started seeking investors and would pace up selling shares in the second quarter of fiscal year 2015-16 and depart before the start of fiscal year 2016-17.
THE GROUND:
It may be mentioned that the KE faced the brunt when Karachi and some adjoining areas of Sindh and Balochistan plunged into darkness due to power breakdowns on July 8, 9, 11, and 12, coinciding with the last 10 days of Ramzan.
National Electric Power Regulatory Authority (NEPRA) sent a five-member fact-finding team to Karachi, which in its report held KE responsible for failing to supply uninterrupted supply to its consumers. The regulator’s team found that the power demand amounted to 3,100MW in this summer but the company’s maximum generation never went beyond 2,700MW and when it touched the mark, the distribution and transmission system started to collapse.
NEPRA, in a show-cause notice to KE, accused the power utility of generating less electricity than the demand “deliberately” and “hiding facts” from the regulator’s fact finding committee. NEPRA asked the KE to submit a response, while if the company fails to provide satisfactory reply it is likely to face a fine and an administrator could be appointed for the takeover of the company.
However, KE claimed that the breakdown was caused by high humidity level which went up to 95 percent. Humidity with heavy winds in vast fields deposited excessive dust residue on transmission lines causing the lines to trip.
KE’S RECEIVABLES AND PAYABLES:
It also should be taken into context that the KE is yet to receive Rs 194.40 billion from the federal and provincial governments and from residential, commercial and industrial consumers.
The federal government owes Rs 53.31 billion on account of tariff differential claims, Rs 38.26 billion KWSB strategic customer (covered under the IA), Rs 2.85 billion GST Refund, Rs 2.62 billion GLMP claim, Rs 0.24 billion interest on FIP loan and Rs 2.41 billion to other federal government bodies.
Moreover, the provincial government of Sindh owes Rs 11.51 billion to KE. Karachi Metropolitan Corporation (KMC) owes Rs 8.33 billion and other provincial departments and bodies owe Rs 3.18 billion to KE. The power utility also claims Rs 83.20 billion dues from residential, commercial and industrial consumers.
Similarly, the power utility would have to pay Rs 69.76 billion to National Transmission and Distribution Company (NTDC), Sui Southern Gas Company (SSGC), Pakistan State Oil (PSO), Karachi Nuclear Power Plant (KANUPP) and others federal and provincial departments. KE also has to pay Rs 30.77 billion to NTDC, Rs 20.74 billion to SSGC, Rs 4.88 billion to PSO, Rs 3.36 billion to KANUPP and Rs 10.02 billion to federal and provincial governments.
KE’S LAST MOVE:
Considering the situation, KE is likely to announce 15 per cent profit to its small shareholders to improve the share value, sources told Pakistan Today.
In 2013-14, KE offered to share Rs 12.88 billion profit with its shareholders after 20 years, which helped in improving share value of the power utility.
As the company showed 89 per cent growth, it has witnessed demand of KE share in the market. It was said that the company’s net profit reached Rs 14 billion in 2014-15 fiscal year and the power utility was again going to announce 15 per cent profit to its shareholders.
A KE shareholder, Chaudhry Mazhar claimed that the power utility has sold millions of shares at Rs 8.50 and Rs 9 recently. He claimed that the power utility was engaged with a Chinese firm to sell 51 per cent of its shares to it. He asserted that the power utility has planned to sell rest of the shares in the market.
KE’S POINT OF VIEW:
In the meanwhile, a KE spokesman neither refuted nor confirmed the information regarding the company’s decision of closing business from the country. He quoted the company’s chairman saying that they would depart ‘decently’ by 2016. He claimed that the power company added 1,037MW to its generation fleet since 2009 and also invested in rehabilitating plants which were running on the low efficiency.
Responding to the NEPRA’s show-cause notice, he said that the power utility was surprised as the fact finding team of the regulator has expressed its satisfaction over the performance of KE during the visit.
He accepted that the power utility has sold some of its shares in the market recently, but he could not give the exact number of shares which were sold till date.
When asked about the company’s profit in fiscal year 2014-15 and possible announcement of 15 percent profit to shareholders, he said he would respond after checking details but did not.
