ISLAMABAD: K-Electric (KE) has reported a staggering net loss of Rs 30.9 billion during the financial year (FY) 2023 which is a stark contrast to Rs 8.5 billion profit the company (KE) earned in FY 2022.
The company reported in their annual financial report that they had earned revenue worth Rs 519,471 million in FY 2023 compared to Rs 518,777 million worth revenue in FY 2022 (0.13percent). Similarly, the gross profit of the KE was Rs 52,812 million in FY 2023 which stood at Rs 68,536 million in FY 2022. Furthermore, the company faced net loss of Rs 30,897 million in FY 2023 while the company reported Rs 8,524 million worth profit in FY 2022.
In its reporter the country’s only vertically integrated utilities provider had claimed the fiscal year was significantly influenced by challenging sociopolitical and macroeconomic factors that have had a cascading impact on multiple sectors including KE. And, the surging inflation, policy rate hikes, rupee devaluation and a contraction in economic activity have cast a significant influence on the company’s operations and overall profitability.
Compared with FY22, KE weathered a 7.3% reduction in units sent out due to reduced economic activity. Inflationary pressures and government-mandated increases in prices of electricity have also impacted customer’s propensity to pay and decreased KE’s recovery ratio from 96.7% to 92.8% between FY22 and FY23, resulting in an increase in impairment loss against doubtful debts.
“Significant increase in consumer-end tariff, fuel cost adjustments and high inflationary pressures etc impacted power customers across the country as a result their ability to pay declined in the recovery ration to 92.8pc in FY 2023 as against 96.7% reported during FY 2022,” said KE’s Annual Report 2023 which is published with a theme of ‘Powering Possibilities’.
Key milestones achieved in FY23 includes the successful commissioning of both units (450MW each) of KE’s 900 MW RLNG-based BQPS-III plant, which is one of country’s most efficient power plants while KE plans to also commission both units of BQPS-III on High Speed Diesel (HSD) which will enable a breakup fuel source to be available for continued plant operations during periods of LNG scarcity.
Construction work is also progressing rapidly on the KE’s first flagship 500kV Grid at KANNUP-Karachi Interconnection (KKI), with pre-commissioning works also being fast tracked for 220 kV Dhabeji grid. These will enable the offtake of additional electricity from National Grid bolstering the supply available for Karachi. The Company’s Investment Plan 2030, submitted to NEPRA for approval, aims to grow KE’s share of renewable energy to 30%, in addition to investments of PKR 484 billion across the transmission and distribution value chain.
During the year (FY 2023), overall transmission capacity was enhanced by 162 MVAs with addition of new power transformers alongside augmentation and replacement efforts in existing grid. This takes the company’s total transformation capacity to 6.965 MVAs as of June 30, 2023.
This capacity enhancement will strengthen the flexibility and reliability of KE’s transmission network and enable the organization to serve growing power demand in growth centres, said KE’s Annual Report 2023.
It is further learnt from KE’s Annual Report 2023 that the company also increased its efforts to curb electricity theft and facilitate customers in clearing their electricity dues. Over 100,000 customers have been supported through facilitation camps across the city, and 100 tonnes of kunda wires have also been removed by field teams operating round-the-clock. Connections with long-standing dues are also being disconnected in line with the NEPRA Consumer Service Manual, the governing document for all distribution companies in Pakistan.
KE remains committed to addressing the prevailing challenges and focuses on enhancing its operational improvements along the value chain. The company is also working on the renewal of the tariff for the next control period started 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 the Government of Pakistan for sustainable resolution of the government receivables’ issue as it is adversely impacting the company’s cashflow position and hence the bottom line. Support from key stakeholders including government and the regulator remains crucial for KE for ensuring continuity of reliable and smooth service to customers, at optimal costs.
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.
