K-Electric (KE) suffered a net loss of Rs. 30.9 billion in FY23 compared with a net profit of Rs. 8.5 billion for FY22.
In a statement, the company said that the recently concluded fiscal year was significantly influenced by challenging sociopolitical and macroeconomic factors that have had a cascading impact on multiple sectors including KE.
The company said that surging inflation, policy rate hikes, rupee devaluation, and a contraction in economic activity have cast a significant influence on its operations and overall profitability.
Compared with FY22, KE observed a 7.3 percent reduction in units sent out due to reduced economic activity. Inflationary pressures and government-mandated increases in the prices of electricity also impacted customer’s propensity to pay, decreasing KE’s recovery ratio from 96.7 percent to 92.8 percent between FY22 and FY23, resulting in an increase in impairment loss against doubtful debts.
The company said that an additional burden is being placed by surging finance costs mainly on account of an increase in the effective rate of borrowing. The company operates under regulated tariff and as per applicable Multi-Year Tariff, no adjustment is provided to the COMPANY in tariff for changes in sent-out and policy rates.
The statement said that despite extremely challenging circumstances, the company continued its journey of investments in the power infrastructure of the city in the interest of its consumers. Key milestones achieved in FY23 included the successful commissioning of both units of KE’s 900 MW RLNG-based BQPS-III plant, which is among the top six efficient generation units in the country.
Construction work is also progressing rapidly on the KE’s first flagship 500kV Grid at 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 percent, in addition to investments of Rs. 484 billion across the transmission and distribution value chain.
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.
Sharing his views, CEO K-Electric stated, “This fiscal year we navigated choppy waters, but our commitment to Karachi did not waver. We are not only strategizing to address the immediate challenges but also fervently working towards the future. We continue to innovate and leverage technology in our business operations and deliver a superior customer experience. We understand the current concerns our customers may have but any direction on price of electricity for the country will come from the Federal Government and is not in KE’s control. We pledge our fullest support to those willing to work with us in overcoming theft and encouraging regular bill payment. Through our envisaged investment, we are also committed to support innovation, sustainability, and liberalization in the power sector.”
FY23 was a tough year. Myriad challenging sociopolitical & macroeconomic factors affected multiple sectors including KE. Inflation,policy rate hikes,PKR devaluation & economic contraction impacted operations. Decreased economic activity also reduced units sent out by 7.3%. (1/7) pic.twitter.com/crzUYXJS1v
— Moonis Alvi (@alvimoonis) September 15, 2023
The statement further said that 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 an adjustment mechanism at par with other power sector entities.
Further, the company remains engaged with the government 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 the government and the regulator remains crucial for KE for ensuring continuity of reliable and smooth service to customers, at optimal costs, it added.