KARACHI (our reporter):- Challenging sociopolitical and macroeconomic factors have had a cascading impact on multiple sectors including KE which grapples with immense challenges during the first half of FY23. Surging inflation, policy rate hike and reduction in economic activity had a significant impact on the Company’s operations and profitability.
The Company observed a reduction in units sent-out by 5.7% on account of reduction in economic activity and an increase in impairment loss against doubtful debts due to high inflation, increase in consumer tariff and current economic conditions impacting customers propensity to pay. An additional burden is being placed by surging finance cost mainly on account of increase in effective rate of borrowing and higher levels of borrowing due to non-payment of dues by Government entities which have surged to an alarming level of PKR 79.6 billion on net principal basis. The Company operates under regulated tariff and as per current Multi-Year Tariff effective from July 01, 2016, no adjustment is provided to the Company in tariff for changes in sent-out and policy rates. The aforementioned factors resulted in net loss of PKR 27.0 billion in the first half of FY23 compared with the net profit of PKR 3.3 billion in the same period for FY22.
KE reiterates that regular bill payment is critical to ensuring uninterrupted supply of power and is taking initiatives to improve recoveries by introducing easy instalment payment solution for its customers under the scheme named as “Humqadam – Recovery Plan” and establishing facilitation camps to address billing concerns. KE’s BQPS-III power plant successfully dispatched during testing its full capacity of 900 MW to grid just before the turn of the period. On the transmission front, KE is making quick progress on its KKI Grid – the first 500 kV facility in KE’s network strengthening the connection with the National Grid – and the new 220 kV Dhabeji Interconnection. Further projects to enhance system reliability are also underway. KE’s proposed investment plan for the next control period (FY24-FY30) which is scheduled for a public hearing by NEPRA on March 01, 2023 is also focused on improving network stability, safety, and reliability to ensure access to affordable energy for all.
The KE remains committed to tackle the challenges and focus on furthering its operational improvements. The company is also working on the renewal of the tariff for the next control period starting from July 1, 2023 with an aim to obtain a sustainable, cost reflective and investment enabling tariff with adjustment mechanism at par with other power sector entities. Further, the Company remains engaged with GoP for sustainable resolution of the government receivables issue as the same is severely impacting the company’s cashflow position and the bottom line. Support from key stakeholders including government and regulator remains critical for KE to ensure continuity of reliable and smooth service to customers at least possible costs.
The K-Electric (KE) is a public listed company incorporated in Pakistan in 1913 as KESC. Privatized in 2005 KE is the only vertically integrated utility in Pakistan supplying electricity within a 6500 square kilometers territory including Karachi and its adjoining areas. The majority shares (66.4%) of the company are listed in the PSX owned by KES Power, a consortium of investors including Aljomaih Power Limited of Saudi Arabia, National Industries Group (Holding), Kuwait, and the Infrastructure and Growth Capital Fund (IGCF). The Government of Pakistan is also a minority shareholder (24.36%) in the company.