K-Electric holds 108th Annual General Meeting – FY 2018

K-Electric holds 108th Annual General Meeting – FY 2018

KARACHI – November 04, 2019: K-Electric (KE) held its 108th Annual General Meeting (AGM) – FY 2018, at a local hotel in Karachi. The meeting was chaired by Ikram Sehgal, Chairman KE Board, with Moonis Alvi, CEO K-Electric also in attendance, along with Aamir Ghaziani, CFO; Rizwan Dalia, Company Secretary & CPO and other members of the Board and KE leadership.

KE’s performance reflected sustained improvement driven by an investment of more than PKR 44 billion in FY 18 across the power value chain. For FY 18, KE declared a profit of PKR 12.3 billion compared to PKR 10.4 billion during FY 17, resulting in earnings per share (EPS) increasing to 0.45 rupees in FY 18 from 0.38 rupees per share in FY 17. This was accompanied by marked improvement in EBITDA, which increased to PKR 32.4 billion (FY 17: PKR 25.8 billion), a 26% increase over last year. Continuous reduction in T&D losses from 21.7% in FY 17 to 20.4% in FY 18 along with higher units sent-out (16,580 GWh in FY 17 to 17,419 GWh in FY 18) are the major contributing factors towards improved financial results. The Company’s Contribution margin rose more than 11% to PKR 67.8 billion from PKR 60.7 billion in FY 17 and balance sheet continues to show consolidation with total assets increasing to PKR 474 billion compared to PKR 396 billion in FY 17.

Shareholders were told about prevailing challenges such as the circular debt situation, which remains a key concern and a severe drain on cash flows. As of September 2019, the outstanding receivables of KE have ballooned to PKR 214 billion on account of outstanding payments from various federal and provincial public sector entities and are nearly two times its payables of around PKR 117 billion. KE management also apprised shareholders about the company’s business plan and targets geared towards catering to Karachi’s increasing power demand.

The power utility continues to forge ahead in enhancing generation capacity, both through its own sources as well as independent power producers (IPP) and remains committed to continue to invest across the value chain, which will further improve operational performance, thus benefitting consumers. KE has already signed project contracts with Siemens AG and Harbin Electric International for setting-up 900 MW Re-gasified Liquefied Natural Gas (RLNG) power plant at its Bin Qasim Power Complex and is also actively pursuing the 700 MW coal-fired plant being built in collaboration with China Machinery Engineering Corporation (CMEC). However, the planned 700 MW coal-project awaits tariff notification from the Government of Pakistan, for which continuous engagement is being done to expedite the tariff notification process. Moreover, KE is also in negotiations with relevant stakeholders for import of 500 MW from the under-construction nuclear power plants KANUPP II & III. Construction of interconnection facilities will however, take at least two and half years once the required approvals for the project are received.

Shareholders were also apprised of the improvements made across the entire energy value chain through investment of more than USD 2.1 billion from 2009 to 2018, which includes the addition of 1,057 MW of power generation, 7% points improvement in overall fleet efficiency as well as a 15.5% points reduction in T&D losses. Apart from this, transmission capacity has been increased by 29% and distribution capacity by 60% over the same time frame. The USD 450 million TP-1000 project is on-course for successful completion. Under this project, seven grid stations and associated power lines and transformers will be added, resulting in the addition of over 1,000 MVAs to transmission capacity. To date, four grid stations have already been brought online, adding over 700 MVAs to power transformation capacity.

The company continues to invest in rehabilitation, upgrade and augmentation of its network, including the conversion of more than 7,500 PMTs to Aerial Bundled Cable (ABC) to combat the menace of power theft, which has resulted in more than 70% of the city and 100% of industries being exempt from load-shed. Safety remains a top priority for the power utility, both for its employees as well as its customers. In this regard, the company will remain engaged with all relevant stakeholders including policymakers, regulatory bodies as well as civic entities to cope with and overcome challenges that arise from a substantial portion of Karachi being unplanned and rife with encroachments, which are major factors in undermining the integrity and reliability of the power infrastructure.

At the AGM, shareholders endorsed the company’s financial statements for the fiscal year ended June 30, 2018 and approved the decision to reinvest the profits into the business.