K-Electric Reports PKR 12.3 Billion Profit for FY2018

K-Electric Reports PKR 12.3 Billion Profit for FY2018

Karachi, September 18, 2019: The Board of Directors of K-Electric Limited in its meeting held on September 18, 2019 at KE head office, approved the Company’s financial results for the year ended 30 June 2018. During the reporting period, over PKR 44 billion has been invested in generation, transmission and distribution while KE’s key financial and operational indicators registered sustained progress, and is geared up to further move up the improvement trajectory on the back of a robust investment plan.

In its financial results issued to the PSX, KE declared profits of PKR 12.3 billion as compared to PKR 10.4 billion during the same period of FY 2017 resulting in earnings per share (EPS) increasing to 0.45 rupees per share in FY18 from 0.38 rupees per share in FY17. The reduction in T&D losses from 21.7% in FY2017 to 20.4% in FY2018 along with higher units sent-out (16,580 GWh in FY 2017 to 17,419 GWh in FY 2018) have been the major contributing factors towards improved financial results. In recognition of the power utility’s improved performance and its investment plan across all business verticals, the Board also decided to reinvest the profit earned in the business. Moreover, KE’s balance sheet remains healthy, with total assets amounting to PKR 474 billion in FY 18 as compared to PKR 396 billion in FY 17.

According to Moonis Alvi, CEO, K-Electric, “In line with our objective of delivering reliable and safe power supply to customers amidst multiple challenges, KE has invested over USD 2.1 billion across the energy value chain between 2009 to 2018. These investments have resulted in an addition of over 1,057 MW of efficient power generation capacity, improvement of overall fleet efficiency from 30.4% in 2009 to 37.4% in 2018, 15.5% points reduction in Transmission and Distribution (T&D) losses and enhanced T&D capacity by 29% and 60% respectively. On the back of these operational improvements, today over 70% of the city is exempt from load-shed with 100% exemption to industries since 2010. KE remains firm in its vision to provide safe and reliable power to all its customers underpinned by investments of around USD 3 billion over the span of next four years, across the power value-chain, resulting in energy self-sufficiency and propelling the socio-economic growth of Karachi and Pakistan.”

It is pertinent to note that various rehabilitation/augmentation projects are currently being undertaken by the power utility to increase system reliability and meet growing power demand. On the Distribution front, KE is scaling up its efforts to combat power theft, which is a societal menace, by installing theft-resistant Aerial Bundled Cables (ABCs). So far nearly 7500 PMTs have been converted to ABCs with full determination to convert the remaining swiftly and sustainably. The power utility continues to keep safety as the top priority in all its operations and remain firm in its commitment to ensure the safety of its employees, power infrastructure and that of its customers throughout its network. At the same time, KE will continue to engage with all relevant stakeholders including policymakers, administrative and regulatory bodies to highlight civic challenges that arise from a major portion of Karachi being unplanned and which affect the integrity of utility infrastructure.

On the generation front, to cater to the increasing power demand, KE continues to make progress towards enhancing its generation capacity through its own generation sources and Independent Power Producers (IPPs). For self-generation, KE is setting up a 900 MW re-gasified liquefied natural gas (RLNG) power plant at its Bin Qasim Power Complex. KE is also working towards the finalization of the Engineering Procurement and Construction (EPC) contract with China Machinery Engineering Corporation (CMEC) for 700 MW coal-fired power plant. In addition, KE is in negotiation with Pakistan Atomic Energy Commission (PAEC), National Transmission and Despatch Company (NTDC) and CPPA-G for import of 500 MW power from the currently under-construction nuclear power plants KANUPP II/III whereas another renewable IPP, Gharo Solar a 50 MW solar project is expected to achieve Commercial Operation Date (COD) by end-2019.

The Company’s TP-1000 project, costing over USD 450 Million, is on course for successful completion by the end of 2nd Quarter of FY 2020. Under this large-scale transmission enhancement project, 7 grid stations and associated power lines, transformers and switches will be added, resulting in the addition of over 1,000 MVAs transmission capacity. Under the project so far 4 grid stations and 22 power trafos have already been brought online, adding 764 MVAs to power transformation capacity.

A key concern however for KE, as with other power sector companies, remains the prevailing circular debt situation affecting the sustainability of the sector. As of July 2019, the outstanding receivables of KE have ballooned to PKR 196 billion on account of outstanding payments from various federal and provincial public sector entities and are nearly two times its payables which totals around PKR 109 billion. The power utility is in continuous engagements with relevant stakeholders for a fair and amicable resolution to the issue of receivables and payables, and has reiterated that financial settlements between the Company and public sector entities must be treated in a fair and uniform manner with all settlements whether Federal or Provincial tabled together under one umbrella.