Shanghai Electric buys Pakistan power firm stake
Print Edition
SHANGHAI Electric Power Co has approval from the National Development and Reform Commission to acquire 61.4 percent for nearly US$1.7 billion in K-Electric Ltd, Pakistan’s power generation giant, the Chinese state-owned energy firm said yesterday.
The acquisition is “the first step of the deal” which includes another US$70 million to raise its stake to 66.4 percent in the Pakistani power company, Shanghai Electric said.
The deal will close in 2017 “at the soonest” and is viewed as “an example to participate in China’s ‘One Belt, One Road’ policy,” Shanghai Electric said.
The Chinese firm sees huge growth potential in power demand in Pakistan whose electricity consumption per capita has been below one-sixth of the world’s average in 2013, the World Bank said. The Chinese company said it decided to “accelerate expansion abroad because the inflow of more competitors has been shrinking its domestic market.”
K-Electric reaped 22.3 billion Pakistani rupees (US$213 million) over the first nine months in 2016, up 40 percent from the same period a year earlier. It has an installed power capacity totaling 2247 megawatts, making up 10 percent of Pakistan’s total.
The deal has also been approved by the Competition Commission of Pakistan in December, but it still needs authorization from Pakistan’s power authorities, Shanghai Electric said.
The company made a profit of 818 million yuan (US$119 million) over the first nine months last year, down 10.3 percent from the same period in 2015.
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