Well informed sources told Business Recorder that the two private parties have signed definitive (initial) agreement and the government has nothing to do with this agreement.
The new buyers have sought support from the government however the government will only extend support when their agreement or business plan will have provisions to facilitate consumers including a commitment to upgrade the system.
"The government will review the investment and business plan minutely prior to committing any support to the new buyers," the sources continued.
The new buyers have conveyed to the government that the company will invest substantially in upgradation of the system and provide better services to the consumers.
The government maintains that problems facing the consumers this summer past should be resolved. "We have also urged the company to invest in generation so that Karachi can become self sufficient in generation," the sources continued.
Ministry of Water and Power, sources said, has directed the new buyers to prepare a detailed presentation regarding investment in generation and distribution systems which would be shared with Sindh government and residents of Karachi and after seeking their feedback, issues will be settled.
Responding to question, the sources said, the new buyers will have to pay the outstanding amounts to federal government entities including NTDC and SSGCL which is around Rs 115 billion or more than a billion dollars.
The new buyers have to clear the entire outstanding amount prior to signing the new Power Purchase Agreement (PPA).
The government, has, however, assured the new buyers that supply of 650 MW from the national grid will continue until the company becomes self-sufficient in generation.
Sources in Securities and Exchange Commission of Pakistan (SECP) pointed out that Shanghai Electric Power is legally required to submit a copy of the agreement for the acquisition of voting shares of K-Electric within 180 days of the public announcement of their intention to it (SECP).
To a query whether the agreement has been submitted to the SECP, sources said that the Shanghai Electric Power (Acquirer) on October 3, 2016 made a public announcement of its intention to acquire voting shares of the K-Electric (target-company). The acquirer is required to submit s copy of the agreement with the public announcement of offer, which may be made within 180 days of the public announcement of the intention.
When asked whether details have been submitted by the Abraaj Group or K-Electric to the SECP, sources revealed that till-date the Shanghai Electric Power (Acquirer) has submitted only the public announcement of the intention and the current regulatory requirements are applicable only on the acquirer.
To a query on SECP role in the entire process, sources said that the agreement is a commercial transaction between the parties and SECP's role is only to protect the interest of the general public (i.e. other than parties to the agreement).
When asked about the details of Abraaj Group definitive agreement to divest its stake in K-Electric to Shanghai Power Company for $1.77bn, sources added that the Commission has only a copy of public announcement of intention.
An insider told this scribe that one Dubai-based Pakistani personality who has close ties with senior members of the Executive has played a pivotal role in the deal and he is clearly visible in a picture of the joint meeting of Abraaj Group and Shanghai Electric with Prime Minister Nawaz Sharif.