Shanghai Power Company (SPC), a subsidiary of the state-owned China Power Investment Corporation, has submitted a new bid to acquire a majority stake in Karachi Electric (KE), the sole power distributor in Pakistan’s largest city. The bid, which was submitted on July 20, 2023, is reportedly worth $1.8 billion and would give SPC a 66.4% stake in KE.

This is not the first time that SPC has attempted to buy KE. In 2016, SPC signed a deal with KE’s current majority shareholder, Abraaj Group, a Dubai-based private equity firm, to acquire its stake for $1.77 billion. However, the deal faced regulatory hurdles and opposition from various stakeholders, including the government of Pakistan, the National Electric Power Regulatory Authority (NEPRA), and the KE labour union. The deal was eventually cancelled in 2019 after Abraaj Group collapsed due to a corruption scandal.

Since then, KE has been struggling with financial and operational challenges, such as high transmission and distribution losses, frequent power outages, and rising debt. The company has also been accused of overcharging consumers and failing to provide adequate service. In June 2023, NEPRA imposed a fine of Rs200 million on KE for violating its performance standards and consumer service manual.

SPC claims that its new bid is aimed at improving KE’s performance and service quality, as well as enhancing its social responsibility. SPC says that it has learned from its previous experience and has addressed the concerns of the regulators and other stakeholders. SPC also says that it has the technical expertise and financial resources to upgrade KE’s infrastructure and reduce its dependence on expensive oil-based power generation.

However, the bid is likely to face resistance from some quarters, especially the KE labour union, which fears that the takeover would result in job losses and lower wages. The union has already announced that it will launch a protest campaign against the bid and will seek support from other trade unions and political parties. The union also questions the transparency and legality of the bid, alleging that it is part of a larger scheme to sell off Pakistan’s strategic assets to China under the China-Pakistan Economic Corridor (CPEC) project.

The bid will also need approval from NEPRA, which will evaluate its impact on KE’s tariff structure and consumer interests. NEPRA will also consider the views of other stakeholders, such as the federal and provincial governments, the Karachi Metropolitan Corporation, and the civil society. NEPRA has said that it will conduct a public hearing on the bid within 30 days of receiving it.

The bid comes at a time when Pakistan is facing an acute power crisis, with demand exceeding supply by more than 6,000 megawatts. The crisis has resulted in prolonged load-shedding across the country, affecting domestic and industrial consumers alike. The government has blamed the previous governments for mismanaging the power sector and has vowed to reform it by increasing generation capacity, reducing losses, and ensuring accountability.