K-Electric faces financial crisis as receivables reach Rs52.2bn

KARACHI: K-Electric is going through a severe financial crisis as the Sindh government is yet to clear off the long-pending electricity dues of its various departments, Pakistan Today has learnt.

According to sources, although a huge amount of Rs52.29 billion under the head of electricity bills is pending for the last couple of years, the provincial authorities seem reluctant to resolve the grave issue.

Neither Sindh Chief Minister Syed Murad Ali Shah nor Sindh Energy Minister Imtiaz Shaikh had met with the K-Electric authorities to resolve the issue despite the fact that KE CEO Syed Moonis Alvi had forwarded various letters (dated 9th April 2019, 13th May 2019 and 1st October 2019) to the Sindh chief minister, asking him to expedite the payment process so that the power utility could ensure smooth functioning.

“As apprised in our earlier letters, K-Electric is facing severe cash flow issues due to the non-payment of dues by the Sindh government. The company is working tirelessly to manage its routine operations along with the purchase and supply of power for Karachi and its adjoining areas,” Alvi stated in the letter. “With large amounts pending in the form of receivables from the Sindh government, KE is facing severe constraints in running its day-to-day operations and ensuring uninterrupted supply of power to the city.”

The letter further stated, “KE’s receivables from different government departments have now increased to Rs19.2 billion, of which Rs4.5 billion have been reconciled. In addition, Rs33.09 billion was also receivable on account of Karachi Water & Sewerage Board (KW&SB), of which Rs28.5 billion dues have been fully reconciled.

In its summary to the Supreme Court of Pakistan, Alvi recalled, the Sindh government had agreed to devise a payment plan for the reconciled amount, which was also made part of SC’s order. However, he added, there have been notable delays in the payment against the mentioned reconciled amount while a payment plan was still awaited.

“As a result, K-Electric’s borrowing has increased substantially and the situation is not sustainable for the company. Moreover, the capacity of banks to finance KE has been exhausted, inadvertently affecting KE’s working capital and long-term expansion plan,” the CEO said in the letter.

According to Alvi, K-Electric has not been a defaulter of current payments to any of its fuel suppliers since 2012, despite the cash flow situation. “However, to be able to make further payments to our suppliers and ensure smooth operations, it is essential that the release of outstanding dues is expedited.” 

Upon contact, Sindh Energy Minister Imtiaz Ahmed Shaikh told Pakistan Today that bills worth Rs6 billion have so far been reconciled and that they are currently under process at the finance department. 

“The Sindh government has nothing to do with the power bills of the Karachi Metropolitan Corporation (KMC), Karachi Water and Sewerage Board (KWSB), District Municipal Corporation (DMCs) and Karachi Development Authority (KDA), as the provincial government gives single line budget to these organizations and they are responsible to clear their utility bills,” he maintained.