Compared to a net profit of Rs. 8.5 billion in FY22, K-Electric (KE) experienced a loss of Rs. 30.9 billion in FY23.
The business said in a statement that difficult geopolitical and economical variables that have had a cascading effect on several industries, including KE, adversely impacted the just ended fiscal year.
The business claimed that a decline in economic activity, depreciation of the rupee, policy rate increases, and rising inflation have had a substantial impact on its operations and overall profitability.
Due to decreased economic activity, KE saw a 7.3% decrease in units sent compared to FY22. Customers’ propensity to pay was also impacted by inflationary pressures and government-mandated increases in electricity rates, which caused KE’s recovery ratio to drop from 96.7 percent to 92.8 percent between FY22 and FY23, increasing the company’s impairment loss on doubtful debts.
The corporation said that rising financing expenses are placing additional stress, mostly due to a rise in the effective rate of borrowing. The business runs under controlled tariffs, and in accordance with the appropriate multi-year tariff, the COMPANY is not granted any tariff adjustments due to changes in sent-out and policy rates.
According to the statement, despite exceptionally difficult conditions, the company kept making investments in the city’s electrical infrastructure for the benefit of its customers. 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 nation, was one of the major milestones reached in FY23.
The KE’s first flagship 500kV Grid at KKI is also under construction at a rapid pace, and pre-commissioning work for the 220 kV Dhabeji grid is also moving quickly. These will make it possible to purchase more electricity from the National Grid, boosting the quantity that is available to Karachi. The Company’s Investment Plan 2030, which was filed to NEPRA for approval, plans to invest Rs. 484 billion throughout the transmission and distribution value chain as well as increase KE’s contribution of renewable energy to 30%.
The business stepped up its efforts to prevent electricity theft and make it easier for customers to pay their electricity bills. Over 100,000 clients have received assistance from facilitation camps spread throughout the city, and field crews working around-the-clock have also removed 100 tonnes of kunda wires. In accordance with the NEPRA Consumer Service Manual, the guiding guideline for all distribution companies in Pakistan, connections with back dues are also being cut off.
In expressing his opinions, CEO K-Electric said, “This fiscal year, despite navigating rough seas, our dedication to Karachi did not falter. In addition to developing plans to handle the current problems, we are ardently pursuing the future. In order to provide a better client experience, we continue to develop and use technology in our company operations. We are aware of the potential concerns our customers may have right now, but KE has no control on how the federal government will set the price of power for the entire nation. We promise to give those who are willing to collaborate with us our utmost help as we combat theft and promote consistent bill paying. We are also committed to promoting innovation, sustainability, and liberalization in the power sector through the investment we anticipate making.
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 went on to say that KE is still committed to fixing the current issues and is concentrating on increasing its operational advancements throughout the value chain. In order to achieve a sustainable, cost-reflective, and investment-enabling tariff with an adjustment mechanism on line with other power sector organizations, the firm is also working on the renewal of the tariff for the next control term beginning on July 1, 2023.
Additionally, the company continues to work with the government to find a long-term solution to the government receivables problem because it is negatively affecting the bottom line and the company’s cash flow situation. For KE to continue providing consumers with a dependable and seamless service at the lowest possible cost, support from important stakeholders like the government and regulator is still essential, the company stated.