Karachi, February 25th, 2021: The Board of Directors of K-Electric Limited (KE) in its meeting held on February 25, 2021, at the Bin Qasim Power Complex, Karachi, approved the Company’s financial results for the half year ended, December 31, 2020. KE has reported a net profit amounting to PKR 6.872 billion for the period under review, translating into an Earning Per Share (EPS) of PKR 0.25. The Board of Directors of KE decided to invest the profits earned back into business.
During the period under review, the Company showed strong operational performance on the back of improved macroeconomic environment after uplifting of the COVID-19 lockdown along with investments of around PKR 26.422 billion across the power value chain. As a result, during the period under review, units sent out grew by 4.8% along with a 5.5% increase in units billed and 0.6% points reduction in T&D losses. It is important to note that the key driver of this growth was industrial segment which showed a growth of 10% higher compared to same period last year. Driven by these operational improvements, the Company’s gross profit increased by 23% as compared to the same period last year. It is pertinent to mention that the company’s net profit after tax includes one major component related to actual write-off claims under MYT amounting to PKR 4.6 billion, NEPRA’s approval of which is pending to date.
The company continued to make strides on its 900 MW RLNG Project. Civil structure of critical systems has been completed and installation of Gas Turbine, Steam Turbine and Unit Main Transformer for the first unit (450 MW) is in progress. The Company signed Heads of Terms Agreement with Pakistan LNG Limited (PLL) in October 2020 for RLNG supply and is in discussions with PLL for signing of GSA for 150 MMCFD RLNG supply. In this respect, Ministry of Energy (Petroleum Division) has also directed relevant stakeholders including PLL and SSGC to resolve pending issues and to expedite the execution of GSA, to ensure timely fuel supply and commissioning of first unit (450 MW) of 900 MW plant by summer of 2021.
In addition, with the anticipated growth in power demand in the upcoming summer, KE is in continuous engagement with Government of Pakistan and National Transmission & Distribution Company for off-take of additional 450 MW through existing interconnection points and it is expected that the required rehabilitation works will be completed by March 2021, enabling evacuation of additional 450 MW through existing interconnections from April 2021 onwards.
A key concern for KE is the prevailing circular debt situation and disputed mark-up claims which in addition to adversely affecting the sustainability of the company, are also a major hindrance in execution of supply agreements with SSGC and NTDC / CPPA. As of December 31, 2020, KE’s net receivables from various Federal and Provincial entities, stood at around PKR 78 billion on principal basis having a consequential impact on the Company’s cashflow position and its ability to enhance the pace of investment in power infrastructure. To resolve the issues related to KE’s payables and receivables, discussions around Terms of Reference (ToRs) for arbitration facilitated by the Privatization Commission are ongoing, and the Company seeks a fair and equitable resolution to the issue in accordance with law.
Going forward, the Company remains committed to its planned investments of USD 1.5 Billion between FY 2021 to FY 2023, spread across the entire power value-chain, including expeditious completion of 900 MW RLNG plant, along with setting up of new grid stations for oﬀ-take of additional power of upto 1,400 MW from the National Grid by 2023, subject to required approvals. However, sustainable resolution to issue of government receivables and timely approvals by NEPRA remain critical to the execution of these planned investments.