Saudi Officials Upset With Pakistan’s Indecision on K-E

Senior Saudi investors in K-Electric (KE)—Pakistan’s only private vertically integrated power utility—have expressed serious frustration with Pakistan’s delays in resolving a long-standing ownership and governance dispute. The indecision threatens not only KE’s future but also Pakistan’s broader investment climate.

• Saudi officials have raised serious concerns over Pakistan’s failure to resolve issues involving Al-Jomaih Group and other investors in KE 

• The Special Investment Facilitation Council (SIFC) relayed warnings that ongoing delays could raise Pakistan’s risk rating, increasing funding costs and deterring foreign investment 

• Earlier promises by PM Shehbaz Sharif to settle the matter within a month have not been fulfilled, deepening Saudi distrust .

• A diplomatic meeting in late June 2025 between Pakistan’s ambassador and Saudi Assistant Minister for Investment sought to ease tensions, but no final resolution was reached

• Major Shareholdings: KE is 66.4% majority‑owned by KES Power, a Cayman Islands fund controlled by Saudi Al-Jomaih, Kuwait’s NIG, and UAE fund IGCF 

• AsiaPak vs Al-Jomaih: In 2022, Pakistan's AsiaPak (led by Shaheryar Chishty) purchased Abraaj's stake in KES Power, prompting Al-Jomaih to claim the sale breached agreements and to secure a Cayman court freeze on board actions

• Board Gridlock: With director terms expiring, no new board could be constituted due to the legal dispute, jeopardizing key reform projects, funding rounds, and day-to-day governance

• Proposed Fix: Saudi investors suggest a buyout or settlement as a way forward, but negotiations remain stalled

• Investment Climate Alert: Senior Saudi officers communicated that the ongoing KE standoff is harming Pakistan's economic credibility and could derail multiple Gulf commitments

• Elevated Risk: Officials warned of rising country risk premiums, higher insurance costs, and declining project viability

• MoUs Under Review: More than 30 business MoUs signed in October 2024 may be re-evaluated due to the KE dispute

• Top-Level Meetings: The Pakistan Ambassador and Saudi Assistant Minister met on June 24, 2025, followed by virtual discussions on June 16. Saudi insistence: settlement before Foreign Minister Malik's upcoming Saudi visit

• $2 Billion KE Reform Plan

• KE's ambitious transmission and renewable energy upgrades hinge on funding that remains elusive without corporate clarity 

• Investor Confidence

• The KE case is seen as a litmus test for Pakistan’s FDI readiness. Delay or mishandling could inhibit long-term Gulf investments.

• Precedent Effect

• SIFC and authorities worry that unresolved conflict might freeze sectoral privatization and result in broader investor wariness 

• Strategic Investor Ties

• Saudi Arabia sees KE as a landmark success in Pakistan's privatization strategy. Continued conflict undermines future cooperation across energy, infrastructure, mining, and finance

• SIFC Mediation: A three-member high-level SIFC committee (Energy, Privatisation, Law ministers) was formed in 2023 to resolve KE shareholder disputes 

• Federal Agreements: In early 2024, Pakistan signed long-pending Power Purchase, Interconnection, and Tariff agreements essential to Saudi-investor demands

• Ambassador’s Reassurance: Pakistan claims consultations are ongoing, with Deputy PM Dar personally taking charge; an interim meeting is due by mid-July 

• Pending Visits: Foreign Minister’s Saudi trip has been delayed until a deal is in place, underscoring the matter’s urgency .

To avoid derailing relations and investor trust, Pakistan should:

• Implement all SIFC recommendations swiftly, including board reconstitution or buyout options.

• Formalize a settlement timeline with explicit milestones communicated to Gulf partners.

• Boost transparency by communicating progress publicly and involving regulatory bodies.

• Capitalize on investor goodwill by inviting broader investments in line with Saudi Vision 2030.

Muhammad Azfar Ahsan, former BOI chair, warned:

“This is a defining moment for Pakistan’s investment narrative… continued delays could severely harm Pakistan’s investment image by elevating its risk profile, increasing cost of capital, and deterring foreign inflows.”

“Investors don’t fear risk; they fear recklessness. And unfortunately, recklessness is becoming increasingly visible… a single unresolved case… could undo two decades of diplomatic and economic outreach.” 

Pakistan’s handling of the K-Electric dispute now stands as a critical benchmark. With Saudi authorities signaling impatience, the nation faces a stark choice between quick resolution or long-term reputational damage. A clear, timely, and fair settlement will not only restore energy-sector stability but also reaffirm Pakistan as a trusted partner for Gulf investment, opening doors to future infrastructure, energy, and development collaboration under Saudi Vision 2030.