ISLAMABAD: In a goodwill gesture, the top management of K-Electric has withdrawn its main conditions of Principle of Reciprocity and arbitration through the London Court from its draft terms of reference (ToRs) to resolve once for all the decade old disputes over receivables and payables between the KE and the government entities. The shareholders of K-Electric from Kuwait, Dubai and Saudi Arabia have also given the nod to the top management to remove the clause of Principle of Reciprocity and agree to the local arbitration mainly on the demand of the government paving the way to resolve the historic dispute over receivables and payables, a senior official at Ministry of Energy confirmed to The News.
“Once the local arbitration resolves the long standing issue of KE’s receivables and payables, then the process to offload 66.40 percent stakes of M/s Abraaj in KE to Chinese electricity giant, Shanghai Electric Power pending since 2016 will be completed.” The official said that the government had suggested to the K-Electric in a meeting held on January 25 to first withdraw its conditions of Principle of Reciprocity and arbitration through London court and agree to local arbitration, then the issue of their receivables and payables will be resolved amicably.
The unpaid dues caused a major blow to the company’s financial profitability in 2020 pushing K-Electric back into losses after eight years of profits which was also a reason behind Karachi’s power outages. The utility’s receivables according to KE have swelled to nearly Rs280 billion with just tariff differential claims at Rs 220 billion while assorted federal and provincial entities owing the the remaining amount.
When contrasted with KE’s payables of which over Rs 170 billion has to be paid to NTDC and Rs 13.7 billion to SSGC (exclusive of the markup claimed on a monthly basis by the gas distributor), KE yet remains in a net receivable position.