International Power in trouble in Pakistan

International Power, the energy group, is facing a potential £130m write-off because of its exposure to electricity generation in Pakistan.

The group has stakes in two power stations – 36 per cent of Kot Addu Power Company (Kapco) and 26 per cent of the Hub Power Company.

Both businesses are facing threats because of the tension between Pakistan and India as well as anti-Western feeling in Pakistan as a result of the Afghan war. Last week, the UK withdrew diplomats from the country for safety reasons.

International Power has already written down the value of its investments in these businesses once. In March 2000, prior to its demerger from National Power, the Kapco stake was written down from the initial £174m investment to £87m and Hubco from £88m to £44m.

Analysts are expecting that International Power may now have to write down the value again or even write off the whole investment.

International Power would not comment on the value of the investments, but said it was maintaining its commitment to the companies and would not withdraw staff.

"We are monitoring the situation very closely and continue to seek regular advice from the High Commission, Deputy High Commission and our international security adviser," said a spokeswoman.