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Rs 7 billion debt may hamper Karachi Electric Supply Corporation privatisation

ISLAMABAD (May 10 2003) : The inter-circular debt of over Rs 7 billion may adversely affect the government plan meant for Karachi Electric Supply Corporation's (KESC) privatisation.

Though the authorities claim that they are working on a formula to resolve controversial issues such as inter-circular debt, dispute of ownership of the Corporation between the federal and provincial governments and litigation on its property which, they apprehend, could hamper KESC privatisation plan.

But, background interviews of officials here indicate that issuance of a clean chit to KESC from its liabilities would be a difficult task and may take much more time than estimated by the authorities to complete the privatisation process.

KESC owes Rs 4.4 billion to Pakistan State Oil (PSO) which, in return, owes an equal amount to National Refinery Limited (NRL).

Other than the PSO dues, KESC owes Rs over 2 billion to PirKoh, an OGDC (OGDC) subsidiary, and around Rs 1 billion to other oil companies.

Against Privatisation Minister Dr Hafeez Shiekh's expectations to make KESC free of hurdles for smooth privatisation in three months, the officials believe that the buyers would like to invest in a problematic KESC instead of pulling on controversies.

The Minister for Privatisation expects that all issues relating to KESC privatisation would be settled by May 22, which will follow announcement of a final date of bidding.

Conscious of the problems, efforts are being made at various levels to persuade the potential buyers that they should come up with an open mind to bid for KESC.

President Pervez Musharraf himself had asked Aga Khan to invest in KESC, when he called on him in Islamabad early this week.

But poor financial health and heavy losses of the Corporation make it less attractive to potential buyers.

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