Delays In Release Of Tariff Subsidy Continue To Strain KE Cashflows

Delays In Release Of Tariff Subsidy Continue To Strain KE Cashflows

KARACHI 30 September 2022: A continued bottleneck on the release of over PKR 380 billion in Tariff Differential Subsidy (TDS) claims is aggravating KE’s cashflow challenges.

As of August 2022, the company’s receivables from various Federal and Provincial government entities stand at PKR 452.7 billion, of which the majority is in the form of TDS Claims. This amount is paid on behalf of consumers to Distribution companies by the Government of Pakistan in order to maintain the rates of electricity under the applicable tariff regime in the country. Disbursement of TDS will also help the company clear its own payables including fuel suppliers. Amid toughening conditions, KE is also renegotiating its service contracts with various vendors/service providers to reduce non-essential services, since the scope of work has significantly reduced.

In a meeting with leading industrial magnate S.M. Muneer and distinguished industrialists from Karachi, CEO KE Moonis Alvi reiterated that power supply to Karachi’s industries remains a top priority for the company. CEO KE also shared that provision of expensive RLNG which is 5 times more costly than natural gas is a major obstacle that can be overcome by the timely release of TDS claims which will help streamline KE’s financial position, reiterating that reconciling these pending claims requires prompt and urgent attention. SM Muneer also expressed his concern on the negative impact on industries due to provision of expensive imported fuels.

About K-Electric

K-Electric (KE) is a public listed company incorporated in Pakistan in 1913 as KESC. Privatized in 2005 KE is the only vertically integrated utility in Pakistan supplying electricity within a 6500 km2 territory including Karachi and its adjoining areas. The majority shares (66.4%) of the company are listed in the PSX owned by KES Power, a consortium of investors including Aljomaih Power Limited of Saudi Arabia, National Industries Group (Holding), Kuwait, and the Infrastructure and Growth Capital Fund (IGCF). The Government of Pakistan