Islamabad, May 05: Pakistan has finalized the power tariff it plans to offer to potential buyers of Karachi Electric Supply Corp. Ltd., said a minister. "The medium-term tariff structure of Karachi Electric Supply Corp. has been decided," said Hafeez Shaikh, minister for privatization. A new tariff, which will be in place for seven years and applicable soon after the privatization of the country's second largest electric utility, gives a 12% fixed return plus service and fuel costs to potential buyers. Pakistan wants to sell up to 73% of the equity in loss-making KESC, which is the vertically integrated utility supplying power to 12 million consumers in Karachi, Pakistan's largest industrial and commercial center. Privatization officials said three consortia are interested in acquiring the management stake in KESC. Some of the major companies which are part of these consortia include South African power group Eskom Holdings, Swiss engineering and power company ABB Ltd. (ABB), Saudi Arabia's Kanooz Al Watan Oil and Seimens Pakistan Ltd. Shaikh said establishing a medium-term tariff structure removes a major hurdle in the sell-off of KESC, which is losing 40% of its production due to power theft and line losses. "We are holding a pre-bid meeting with potential bidders later month. We'll try to firm up a final date for its auction after that," said Shaikh. The government has made many failed attempts to sell off KESC, which needs investment of about $500 million to improve its network and curb system losses. The utility has installed capacity of 1,750 megawatts, but produces only 1,250MW. Pakistan plans to privatize telecommunications, oil and gas concerns and banks this year to raise money to retire its debt and for poverty-reduction programs.
Bureau Report