Karachi, October 26, 2023 – During its 113th Annual General Meeting (AGM) for the fiscal year 2023, the board members of K-Electric (KE) expressed their concern over the adverse effects of Pakistan’s economic crisis on the company’s financial performance.
The AGM, chaired by Moonis Alvi, Chief Executive Officer of KE, saw the participation of the Chairman of the Board, Mark Skelton, and most board members attending virtually. However, KE’s leadership and two board members, Adeeb Ahmad and Saad Amanullah Khan, were present in person.
The economic crisis, exacerbated by prevailing sociopolitical and macroeconomic challenges in Pakistan, had a profound impact on KE’s financial performance. Factors such as high inflation, increased policy rates, and economic contraction were identified as key drivers behind this crisis. As a result, the company experienced a 7.3 percent reduction in units sent-out and a substantial decline in gross profitability, totaling PKR 15.72 billion.
Additionally, exchange losses increased by PKR 4.38 billion due to the devaluation of the Pakistani Rupee. KE also reported a PKR 6.28 billion increase in impairment losses related to doubtful debts, influenced by high inflation and deteriorating economic conditions, which reduced customers’ ability to pay. Increased finance costs, amounting to PKR 19.45 billion, primarily due to higher effective borrowing rates, led to a loss after tax of PKR 30.90 billion.
Despite the formidable economic challenges, KE reaffirmed its commitment to infrastructure upgrades to enhance services within its territory. The construction of the 500kV KANNUP-Karachi Interconnection (KKI) Grid, the company’s flagship 500kV Grid, is progressing rapidly. Pre-commissioning activities for the 220kV Dhabeji Grid are also being expedited, with operations expected to commence in the fiscal year 2024.
KE successfully commissioned both Unit 1 and Unit 2 of its 900 MW RLNG-fired power plant, BOPS-III, during the fourth and third quarters, respectively. Furthermore, the company increased the total transmission capacity by 162 MVAs, reaching a net transmission capacity of 6,965 MVAs through the addition of new power transformers and planned upgrades in existing grids.
KE’s leadership emphasized its efforts to combat electricity theft and facilitate customers in clearing their electricity dues. Over 100,000 customers received support through facilitation camps across the city, while 100 tonnes of unauthorized connections (kunda wires) were removed by field teams operating round-the-clock. KE’s Investment Plan, valued at PKR 484 billion for the next control period (FY30), is pending approval from the National Electric Power Regulatory Authority (NEPRA) and demonstrates the company’s commitment to upgrading infrastructure for a more reliable power supply in the region. The Power Acquisition Program aims to add 2,272 MW of generation from renewable and indigenous sources. By 2030, KE plans to have renewables account for 30 percent of its total supply for Karachi.
The company is actively working on renewing the tariff for the next control period starting from July 1, 2023, with the goal of securing a sustainable, cost-reflective, and investment-friendly tariff mechanism in line with other power sector entities. KE remains engaged with NEPRA for timely and sustainable tariff determinations, and due to these pending determinations, it will not be able to issue financial statements for the quarter ending September 30, 2023, and subsequent quarters until the tariff is finalized.
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