ISLAMABAD — The Executive Committee of the Special Investment Facilitation Council (SIFC), set up on the instructions of Army Chief General Asim Munir, has formed a three-member committee to resolve the issues related to Karachi Electric (KE) after stakeholders from Saudi Arabia and Kuwait showed serious concerns.
The powerful committee consisting of energy minister (chairman), privatization minister and law minister was formed after Saudi and Kuwaiti investors raised concerns at the highest level in Pakistan. The development came in the wake of claims made by the Infrastructure and Growth Capital Fund (IGCF) about the KE ownership.
Those with inside knowledge of the development said the decision to form the three-member committee was taken to assuage the Saudi and Kuwaiti concerns and this message was sent to everyone involved in the dispute.
Sources said it was intervention from the highest level in the first week of September that made the law ministry pass directives to the Privatization Division to closely monitor the KES Power Ltd (KESP) and K-Electric case pending in the Sindh High Court.
The ministry had advised the legal counsel for the Privatization Division to seek extension in the stay with respect to changes to the KE board of directors. The case about the legitimacy of the sale of KE shares to Sage Ventures Limited by the liquidators of the Abraaj Investment Management Ltd (AIML), who controlled the Infrastructure and Growth Capital Fund (IGCF), is currently being heard in the Sindh High Court.
In October 2022, the Sindh High Court issued an interim order, preventing any changes to the composition of the KE’s Board of Directors without the consent of the principal shareholders of KES Power namely Al-Jomaih and NIG Holdings of Saudi Arabia and Kuwait, respectively.
Shaheryar Arshad Chishty, chief executive officer of AsiaPak Investments Limited, confirmed the same in a letter addressed to Muhammad Ali, federal minister for energy, power & petroleum. The letter says: “I welcome the formation of a three-member committee by the SIFC and appeal to your good offices to help resolve Al-Jomaih’s concerns so that we can all focus on putting KE on the path to recovery. I am the nominated Director representing IGCF in relation to these discussions and would request the SIFC committee to invite the principal decision maker on the Al-Jomaih side for a meeting to resolve these issues in a fair and amicable manner.”
The development comes after a row started in media as to who owns majority shares in KE. Al-Jomaih Group of Saudi Arabia and National Industries Group (NIG) of Kuwait, collectively called as the Original Shareholders, obtained KE stake in 2005. In 2008, Abraaj joined the Original Shareholders through IGCF SPV 21. After the 2018 scandal of Abraaj’s collapse, liquidators managed IGCF SPV 21 stake in KESP.
In 2022, Sage Ventures, a newly incorporated entity with no track record, owned by Chishty and his spouse, claimed majority stake through backdoor transactions in Cayman Islands. This was overwhelmingly opposed by Original Shareholders i.e., the Saudi and Kuwaiti conglomerates.
In October 2022, Sage Venture Group Ltd, a special-purpose company registered in the British Virgin Islands under AsiaPak Investments Ltd, assumed the role of “general partner” for IGCF. This transition occurred through a closed-door court process whereby AIML sold the assets, a company that was undergoing official liquidation proceedings. A general partner raises capital from investors and oversees a private equity fund on behalf of limited partners and acts as a manager. Now it seems both, the recent general partner and its parent company, are ultimately under the ownership of Chishty.
Original stakeholders contend that the assertion of majority ownership in KE lacks foundation. Acquiring the General Partner (GP) of IGCF only entails management rights, devoid of economic stake in KE. The IGCF Fund’s share in IGCF SPV 21 consists solely of non-voting shares.
