K-Electric warns of crisis on non-payment of dues by Sindh departments

KARACHI: K-Electric – the power generation and distribution company – has demanded the Sindh government to pay the dues on urgent basis as non-payment will result into potential crisis for Karachi city.

In a letter to Sindh Chief Minister Syed Murad Ali Shah the power utility requested for support in expediting the release of outstanding dues of different department of the provincial government.

The K-Electric said it was facing severe cashflow issues due to the non-payment of dues by the government of Sindh. The company is working tirelessly to manage its routine operations and maintainance along with the purchase of power for the smooth functioning of the operations and to supply safe and reliable power to Karachi and its adjoining area.

“However, this has been communicated to your office time and again that with large amount pending in the form of receivable from the government departments, KE is facing severe constraints in running its day to day operations and ensuring seamless supply of power to the city.”

The power utility said that its receivable from different departments of the Sindh government had increased to Rs19.2 billion, of which Rs4.5 billion had been reconciled.

In addition, Rs33.09 billion is also receivable on account of KW&SB out of which Rs28.5 billion in dues have been fully reconciled.

In its summary to the Supreme Court of Pakistan, the Sindh government agreed to devise a payment plan for the reconciled amount, which was also made part of the apex court’s order.

However, there have been notable delays in the payment against the mentioned reconciled amount and a payment plan is 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 effecting KE’s working capital and long-term expansion plan.

The KE said that it was not a defaulter of current payments to any of its fuel suppliers since 2012, despite the cashflow situation. However, to be able to continue to make payments to the suppliers and ensure smooth operations, it is essential that the release of outstanding dues is expedited.

“… the non-payment of these dues will result into potential crisis for the city and the sustainability of KE’s operations,” it said.

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