KE affirms its commitment to energizing Karachi’s future

KE affirms its commitment to energizing Karachi’s future

Karachi November 17, 2023: Despite sociopolitical and macroeconomic challenges which have affected multiple sectors across the country, KE remains steadfast towards customer centricity, thus aligned in serving its customers in the most reliable and efficient way. This was stated by Aamir Ghaziani, Chief Financial Officer of KE at the Corporate Analyst Briefing session held at the Pakistan Stock Exchange (PSX) recently. Other members of the KE Leadership team were also present at the session.

The Company’s performance for the financial year 2023 has been significantly affected by challenging sociopolitical and macroeconomic factors that have had a cascading impact on multiple sectors including KE. Factors such as surging inflation, a policy rate hike, rupee devaluation and a contraction in economic activity have cast a significant influence on the company’s operations and overall profitability. In FY23, KE observed a 7.3% reduction in units sent out due to reduced economic activity. Despite tough macroeconomic conditions, KE was able to successfully achieve NEPRAs T&D loss benchmark of 15.3% in FY 2023.

The devaluation of the Pakistani Rupee contributed to a rise in exchange losses by PKR 4.38 billion. Additionally, impairment losses related to doubtful debts increased by PKR 6.28 billion, influenced by escalating inflation and a challenging economic landscape, affecting customers’ propensity to pay. Further, a substantial rise in finance costs by PKR 19.45 billion, primarily driven by elevated borrowing rates, resulted in a post-tax loss of PKR 30.90 billion for the company.

During the briefing session, KE leadership apprised the audience regarding its continued investment in the power infrastructure. Currently, the construction of the 500kV KANNUP-Karachi Interconnection (KKI) Grid, being the Company’s first flagship Grid at 500kV is witnessing rapid progress. Similarly, the pre-commissioning activities of the 220kV Dhabeji Grid are also being expedited with the grid expected to commence operations in FY 2024. Furthermore, during FY 2023, both Unit 1 and Unit 2 of KE’s 900 MW RLNG-fired power plant, BOPS-Ill witnessed successful commissioning and set off commercial operations during Q4 and Q3 respectively which paved the way to the improvement in generation fleet efficiency by 3.6% in FY23. Simultaneously, targeted recovery drives are in place to improve the recovery ratio while also supporting customers through facilitation camps across the city. The field teams remain active round-the-clock to remove kunda wires and curb power theft.

During the briefing session, Sadia Dada, Chief Marketing and Communication Officer (CMCO) shed light upon KE’s strides in Environment, Social, and Governance (ESG) initiatives, showcasing notable progress and achievements. In FY23, the company continued spreading safety awareness, thus reaching 57,000 children through its School Safety Campaign in 17 hazard prone areas of Karachi. Likewise, via its award-winning Roshni Baji programme, it extended its reach to 200,000 households in FY23 through the ongoing determination of 50 Roshni Bajis. Through this initiative, KE has elevated the cumulative number of households which reached over 660,000 across three years, spanning from FY21 to FY23. Furthermore, during FY23, KE achieved an impressive 23% reduction in Greenhouse Gas (GHG) Emissions compared to FY22, a triumph credited to the incorporation of exceptionally effective energy production. KE also spearheaded pivotal environment-friendly initiatives while also planting over 100,000 mangrove trees in continuation of its decarbonisation efforts.

The company is also working on the renewal of the tariff for the next control period started from July 1, 2023, with an aim to obtain a sustainable cost reflective tariff with robust adjustment mechanism which is timely determined. Furthermore, KE is in engagement with Government Entities for release of net receivables. Mediation Agreement has been initialed for resolution of disputes around historic dues which will be executed after approval from the Cabinet. Continued support from essential stakeholders, including the government and regulatory bodies, remains pivotal for KE to ensure an uninterrupted and efficient service to customers at optimal cost.

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 square kilometers 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 is also a minority shareholder (24.36%) in the company.