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Dr. Abdul Hafeez Shaikh, Federal Minister for Privatisation & Investment
while chairing the Pre-Bid Conference on Privatisation of Karachi Electric
Supply Corporation (KESC) said that the privatisation of KESC was in the final
stage and the bidding was scheduled for December 6, 2004 with the consent of
the participating potential bidders. The financial close is likely by December
31, 2004. The Conference was held to facilitate the bidders for better
understanding of the transaction and the privatisation process and to decide
on the bid documents and bidding schedule here today.
Dr. Hafeez Shaikh said that all bidders would be given level playing field to
ensure transparent and satisfactory bidding process. He directed the concerned
officials to resolve remaining issues to the satisfaction of the bidders,
which would be a landmark transaction in the power sector would set the scene
for a rapid turn around of the electric utility and for significant investment
in the infrastructure of Karachi, the Minister said.
The Financial Advisor for KESC Pricewaterhouse Cooper made a presentation on
the current operations of the company and informed about the efforts
undertaken during the past two year for the betterment of financial and
technical aspects and the steps taken to resolve most of the bidders concerns
and detailed the transaction structure and the measures for improving the KESC
condition. The FA informed the potential bidders have completed the initial
due diligence of the transaction. The bidders had sought 3 to 4 weeks prior to
bidding for the completion of bidding documents, which was agreed.
The transaction structure involves the sale of between 51% and 74% of the
ordinary shares in KESC, with an innovative rights issue of cumulative,
redeemable, preference shares to secure Rs 6 billion additional funding to
support the continued turn around at KESC. The privatisation plan builds on a
major restructuring of the finances and balance sheet of KESC by the Federal
Ministry of Finance over the last two years, the adoption of a long term
regulatory framework by the National Electric Power Regulatory Authority and
significant improvements in the financial and operational performance of the
company under the current, Army-led management.
The Government of Pakistan will retain a minimum 25% stake in KESC for the
time being to ensure commitment as a measure of comfort to the prospective
buyer of the utility. In addition, the Asian Development Bank has indicated
its willingness to acquire a 6.7% stake alongside the successful bidder and
may also provide additional funding for the turn around.
The MD KESC also gave a briefing regarding the financial improvements carried
out so far and the future plans in this regard. PC Board members, the
representatives of Ministries of Water & Power, Finance, Petroleum & Natural
Resources, NEPRA other stakeholders and Privatisation Commission officials
were also present in the conference.