Mashreqbank warns:KE Board cannot legitimately vote on management changes

ISLAMAABAD: M/s Mashreqbank PSC has raised serious concerns over a proposed change in the management of K-Electric (KE), warning that any decision, directive, or vote taken on behalf of KES Power (KESP) lacks proper authority, sources in Power Division told Newzshewz on Friday.
The concerns were conveyed by WALKERS (CAYMAN) LLP — the Cayman Islands legal counsel to Mashreqbank — in a letter addressed to the Board of Directors of K-Electric.
According to the letter, dated November 13, 2023 and sent on the same day as a KE board meeting, Mashreqbank appointed joint receivers over the issued share capital of Abraaj SPV 108 Limited and Abraaj SPV 127 Limited (the “AH Parties”). The AH Parties collectively hold 28.94% of the shares of IGCF SPV 21 Limited, which in turn owns 53.8% of KESP. KESP holds a 66.4% shareholding in K-Electric.
Concerns Over Tariff Reduction
The letter stated that Mashreqbank had learned, through media reports and a letter from Al Jomaih Power Limited and Denham Investments Limited to Pakistan’s Attorney General dated October 20, 2025, that a retroactive reduction in KE’s multi-year tariff was expected to take effect on or around November 20, 2025.
“It is our client’s understanding, based on K-Electric’s FY2024 performance and assuming all other factors remain constant, that the proposed tariff reduction would result in a loss of between PKR 79 billion and PKR 100 billion to K-Electric,” the counsel wrote. Such a loss, it warned, could impair KE’s ability to secure continued support from local financial institutions and may even force the utility to suspend operations temporarily. A decline in KE’s share price was also anticipated.
Mashreqbank emphasized that, as an economic interest holder in KE, it is “deeply concerned” that the tariff cut would destroy long-term value for K-Electric, its investors, and the broader Pakistani financial ecosystem. Local banks currently hold more than Rs 181 billion of KE’s debt — over 55% of the total — raising the risk of significant financial exposure.
While Mashreqbank welcomed the recent Sindh High Court stay order against implementation of the tariff reduction, it stressed that the threat to KE’s financial viability remains, and urged stakeholders to actively engage on the issue.
Objections to Management Changes
Mashreqbank also expressed alarm over reports that moves were underway to convene a KE board meeting to appoint a new CEO or otherwise alter the board’s composition.
“This is a matter of serious concern to our client. Please provide details of any such proposed changes,” the letter stated.
The counsel highlighted that two ongoing legal proceedings in the Cayman Islands relate to the composition of KESP’s board, including a claim by the AH Parties regarding the alleged wrongful exclusion of Mashreqbank’s corporate director (KP Corporate Director Ltd). In light of these disputes, the bank argues that any decisions made by or on behalf of KESP are “vitiated by the absence of proper authority.”
Bank Allows Disclosure to Government
Mashreqbank reiterated that it supports KE’s efforts to safeguard its financial integrity and maintain uninterrupted operations. It has also authorized K-Electric to share the letter with relevant stakeholders, including the Government of Pakistan, as a formal record of the bank’s position on the proposed tariff reduction.