K-Electric (KE) reported a net loss of Rs. 39.4 billion in the nine-month period of FY23, compared with a net profit of Rs. 1.49 billion in the same period for FY22.
Rupee devaluation, surging inflation, policy rate hikes, and reduction in economic activity, along with continuing volatility in sociopolitical and macroeconomic conditions throughout FY23 have had a trickle-down impact on multiple sectors including KE. The company’s operations and profitability have been impaired during the first nine months of FY23 as a result of these persevering challenges.
Compared with the period July to March 2022, KE has observed a reduction in units sent out by 5.8% due to reduced economic activity, huge exchange loss owing to the devaluation of the Pak Rupee, and an increase in impairment loss against doubtful debts due to high inflation, government-mandated increases in consumer tariff, and current economic conditions, which collectively are impacting the customers’ propensity to pay.
An additional burden is being placed by surging finance costs, mainly on account of an increase in the effective rate of borrowing and higher levels of borrowing. KE operates under a regulated tariff and as per the current Multi-Year Tariff, effective from July 01, 2016, no adjustment is provided to the company in tariff for changes in sent-out and policy rates.
The company reiterates that regular bill payment is critical to ensuring an uninterrupted supply of power and is taking initiatives to improve recoveries by introducing an easy installment payment solution for its customers under the scheme, “Humqadam – Recovery Plan.”
On the transmission front, KE is making quick progress on its KKI Grid – the first 500 kV facility in KE’s network strengthening the connection with the National Grid – and the new 220 kV Dhabeji Interconnection. Further projects to enhance system reliability are also underway.
Source: Pro Pakistani