K-Electric loss

K-Electric (KE), one of Pakistan’s leading power distribution companies, has reported a significant net loss of Rs. 39.4 billion in the first nine months of the current fiscal year (FY23). This is a sharp decline compared to the same period last year when the company recorded a net profit of Rs. 1.49 billion.

Several factors contributed to KE’s poor financial performance, including the devaluation of the Pak Rupee, surging inflation, policy rate hikes, and a reduction in economic activity. These conditions have persisted throughout the current fiscal year, leading to a trickle-down effect on multiple sectors, including KE. The company’s operations and profitability have been significantly impacted by these challenges.

During the July to March 2022 period, KE observed a reduction in units sent out by 5.8%, mainly due to reduced economic activity, exchange rate losses, and an increase in impairment loss against doubtful debts. High inflation, government-mandated increases in consumer tariffs, and the prevailing economic conditions have collectively impacted customers’ propensity to pay.

KE is also facing a surging finance cost, mainly on account of an increase in the effective rate of borrowing and higher levels of borrowing. KE operates under a regulated tariff, and as per the current Multi-Year Tariff, no adjustment is provided to the company in the tariff for changes in sent-out and policy rates.

The company has emphasized the importance of regular bill payments to ensure an uninterrupted power supply. KE is taking initiatives to improve recoveries by introducing an easy installment payment solution for its customers under the scheme, “Humqadam – Recovery Plan.”

Despite the challenging economic conditions, KE is making quick progress on its KKI Grid, the first 500 kV facility in KE’s network that strengthens the connection with the National Grid. The company is also working on other projects to enhance system reliability, such as the new 220 kV Dhabeji Interconnection.

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