Equity Analysis /
Pakistan

K-Electric: K-ELECTRIC: Regulatory regime could be challenged again

    Vahaj Ahmed
    Vahaj Ahmed

    Head of Industrials Equity Research

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    Tellimer Research
    11 October 2017
    Published byTellimer Research
    New tariff remains impractical in spite of some improvements to the one proposed in March 2017. Pakistan’s power regulator has announced some changes to the new multi-year tariff (MYT) which was proposed in March 2017. In theory, the new MYT may have very little impact on our equity value estimate but, in practice, it could impair the ability of K-Electric (KEL PA) to carry out, and finance, the capex required to meet regulatory efficiency targets. We therefore believe the new tariff will once again be challenged by KEL, which could further delay Shanghai Electric’s acquisition of a 66.7% stake in the company.