On January 10 this year, the Pakistan Stock Exchange (PSX) received a letter from one Asad Ali Shah. The letter alleged that Karachi Electric (KE), the company that holds a virtual monopoly over Karachi’s electricity generation, transmission and distribution, has been fudging their numbers.
“There are material misstatements in the financial statements of KE, which render them misleading,” reads the letter that has stirred up quite the storm in Pakistan’s energy sector. What kind of misstatements in the financials is Shah alleging? In his letter he states that in financial statements for the period ending September last year, “the aggregate amount of revenue and receivables recognised in respect of write-offs amounted to Rs 53.5 billion.”
These “write-offs” are the tariff differentials that the government of Pakistan pays to companies like KE. Since there is a difference between the electricity tariff paid by consumers and the allowable costs of electricity utilities determined by the regulator, NEPRA, the centre ends up paying back this tariff differential.
In short: the letter is claiming that KE has written up a higher bill for the federal government than is due and has also overstated cumulative profits by a massive amount of Rs 53.5 billion. What makes the letter so deadly? For starters, Shah formerly sat as director on the board of KE and his concerns have been seconded by another board member by the name of Naveed Ismail. On top of that, Shah is former president of the Institute of Chartered Accountants Pakistan (ICAP) and managing partner at Deloitte Pakistan — meaning he has a professional understanding of the numbers and balance sheet. The content in this publication is expensive to produce. But unlike other journalistic outfits, business publications have to cover the very organizations that directly give them advertisements. Hence, this large source of revenue, which is the lifeblood of other media houses, is severely compromised on account of Profit’s no-compromise policy when it comes to our reporting. No wonder, Profit has lost multiple ad deals, worth tens of millions of rupees, due to stories that held big businesses to account. Hence, for our work to continue unfettered, it must be supported by discerning readers who know the value of quality business journalism, not just for the economy but for the society as a whole.To read the full article, subscribe and support independent business journalism in Pakistan
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Where are the numbers? we should have the stats to ease to comparison, it should be available from the financial statement or last quarter or you can copy from the PSX
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