Cabinet okays bid for KESC privatisation
ISLAMABAD: The cabinet endorsed the sale of a 73 percent stake in the Karachi Electric Supply Company (KESC) to a consortium of Saudi Arabiaís Kanooz al Watan group and Germanyís Siemens AG on Monday.
The Cabinet Committee on Privatisation approved the consortiumís Rs 20.24 billion bid at a meeting chaired by Prime Minister Shaukat Aziz.
Aziz said the government had injected Rs 108 billion into the KESC over the last three years to keep it afloat, money that could have been spent on education, health and infrastructure. KESC was causing the government an annual loss of Rs 15 billion, he said.
The cabinet committee was informed that the National Electric Power Regulatory Authority (NEPRA) had approved a seven-year tariff formula for KESC that envisages the reduction of power prices if the company starts making profits beyond a certain level.
Under the terms of the auction, the new owners would make full payment within a month and would later inject an additional Rs 4.3 billion into the company by issuing preference shares.
KESCís contract employees will get a 20 percent increase in their salaries. The new management cannot lay off any employee for one year. Trade union activities, which are suspended, will be allowed six months after the transfer of management. The meeting was informed that no employees have been laid off in any of the 18 state companies privatised in the last three years.