An announcement to this effect was made in a statement issued here on Tuesday.
It said that this amendment comes as an `addition to an earlier Implementation Agreement (IA) signed by the GoP in 2005 and was a crucial precondition in the finalization of the agreement at the KES Power shareholder level, which would handover management control of KESC to Abraaj Capital'.
The amendment, the statement pointed out, signed between the GoP and KESC, will facilitate private equity investment of US$ 361 million with the completion of requisite corporate actions and necessary approvals, over the next three years and enable KESC to finally realize its goal of implementing an ambitious turnaround and growth plan, in accordance with the original privatization plan.
It was further stated that the investment comes through the introduction of Abraaj Capital, the market-leading regional private equity firm, based in Dubai and with a presence all over the Middle East, North Africa and South Asian (MENASA) region, as the new majority shareholder to the holding company of KESC namely KES Power.
With funds under management of close to US$ 6BN worldwide, Abraaj's strategic stake in KES Power of US$361 million gives KESC the unique backing of the major player in the investment field in the region, one with an established management and operational track record in large-scale 'distress turnaround', as well as a depth of funding capability likely to give the GoP significant comfort about the future of KESC under the new management.
The statement further pointed out that Abraaj's investment in Pakistan will now exceed US$ 500 million of equity, which includes its earlier investments in Bosicor, BMA Capital and MS Forging. By virtue of its direct investment in KES Power, Abraaj will acquire indirect majority equity stake in KESC.
The entire sum of capital will come into KES Power the benefit of which will cascade to KESC in the form of enhanced electricity generation, transmission and meeting of the distribution needs of the country's economic hub, the city of Karachi.
The timing of the investment is crucial considering the state of KESC's outdated systems and losses that have aggravated load shedding and outages over the last few years.
Naveed Ismail, CEO - KESC highlighted, `This is a major commitment from Abraaj at a time when global economic challenges are making investors review their positions and retrench in most markets. KESC has never seen an investment of this scale in its entire history.
Turning KESC around will need time and commitment from all stakeholders. The Abraaj investment is critical to the future of the KESC, the safekeeping of its employees and to protecting the interests of the citizens of Karachi. It represents a watershed for KESC and the citizens of Karachi. Ultimately, the decision to invest in KES Power which ultimately cascades into KESC is a huge symbol of support for Pakistan's economic potential, especially at this time of global uncertainty'.
Mustafa Abdel-Wadood, Managing Director of Abraaj Capital noted, "We have been talked about as the investing party in this deal for some time and we are pleased that the pending formalities are now near complete. The GoP and the public in Karachi should treat this as a major commitment on Abraaj's part and as a signal of our confidence in Pakistan, a market with continued potential for long-term strategic investors like ourselves".
The statement further pointed out that the Abraaj investment into KES Power which ultimately cascades into KESC will be vital to execute a five-year plan that will add 1100 MW to the existing grid in next three years out of which 450 MW of this will be on-stream by the end of September 2009.

Copyright APP (Associated Press of Pakistan), 2009