Core strategic metrics of K-Electric (KE) showed positive development over the previous period, owing to continuous and targeted investments of PKR 36.99 billion across the power value chain. Despite a 1.5 percent reduction in transmission and distribution losses and a 2.8 percent increase in units sent out, KE’s net profitability fell by 84 percent to PKR 1.5 billion, compared to PKR 9.44 billion the previous year.
The negative impact of the Pakistani rupee’s significant devaluation in the international market negatively influenced KE’s operational performance. This resulted in a PKR 4 billion exchange loss, compared to a PKR 1.2 billion gain last year. Financing costs increased by PKR 1.4 billion due to an increase in the effective rate of borrowing and the Mid-term review (MTR) decision.
On the main basis, KE’s net receivables from various federal and provincial government agencies amounted to PKR 53 billion as of March 31, 2022. Delays in the reconciliation and delivery of valid payments from these companies significantly impact the company’s cash flow condition and capacity to accelerate investment in critical electricity infrastructure.
On March 1, 2022, NEPRA issued its decision on KE’s MYT Mid-Term Review, in which NEPRA reduced the utility’s set tariff by PKR 0.22/kWh. NEPRA also denied KE’s request for an extra PKR 138 billion investment to strengthen its electricity supply and reliability services.
Development of Projects
This quarter is an important update for this quarter, and the finalization and deployment of KE’s 900 MW RLNG-based power plant, BQPS-III, is an important update for this quarter. The first 450 MW unit completed necessary testing in March 2022 and synchronized with KE’s grid and is presently in the last stages of testing before commissioning.
KE has also improved its infrastructure in its service areas to keep up with and enable the city’s peri and suburban economic growth. Aside from restoration, Winder’s grids are being improved, with the 66kV line being upgraded to 132kV and additional lines being commissioned to enhance transmission capacity and reliability in the region.
In addition, 6 new power transformers have been installed into the network to boost capacity and systemic stability, ensuring stable power delivery to consumers across Karachi.
The company made further progress in its loss reduction initiatives on the distribution front. In the first nine months of the current fiscal year, over 200,000 KG of unlawful hooks (Kunda) were removed from the system, and 800 Pole Mounted Transformers (PMT) were converted to Aerial Bundled Cables (ABC), with over 125,000 new connections established.
Furthermore, 17 extra Customer Facilitation Centers have been established to assist consumers with billing inquiries to emphasize customer-centricity.
By SDG7, KE has inked an MoU with the Sindh Energy Department (SED) and the World Bank (WB) to create solar projects with a capacity of 350MW. This tri-party agreement will add 700 GWh to KE’s overall renewable energy supply and mitigate 300-350 kilotons of carbon emissions each year.
KE has also collaborated with Akhuwat to provide PKR 7.5 million in interest-free microfinance loans to homes to install solar photovoltaic (PV) systems within the company’s service zone.
Investment on Communities
Aside from long-term growth, KE is committed to empowering individuals and communities. Following the success of the first cohort of the Roshni Baji Neighborhood Women Ambassador Programme, the second cohort of 60 women was inducted in November 2021. They will be on the ground in Karachi’s most densely populated neighborhoods for nine months.
By the end of March 2022, the Roshni Baji’s had held discussions with over 210,000 families about safety and legal connections, bridging the gap between the utility and a major population of women users in Karachi. Separately, 11 women from the program’s inaugural class have been hired as KE female Meter Data Maintenance Officers (MDMO).
This initiative was recognized internationally at the S&P Global Platts Global Energy Award. This is also the first time in Pakistan that an energy company has received prestigious honor and distinction.
In keeping with KE’s commitment to safety, the firm launched a thorough strategy to revalidate the safety parameters on its High-Tension and Low-Tension networks, improve network resilience and maintain public safety, with 99 percent of the project completed.
Furthermore, KE’s HSEQ department held comprehensive Behavior Safety Management sessions for field workers to instill a safety culture throughout the organization.
KE works with stakeholders to finalize and execute the Power Purchase Agency Agreement (PPAA) and Interconnection Agreement (ICA) for the National Grid delivery of 2,050 MW to KE. A Tariff Differential Subsidy Agreement (TDS) is also in the works, which will streamline the procedure for the utility and reduce pressure on the company’s financial stability.
In addition, the company continues to work with government authorities to reach an equitable settlement to the issue of past receivables and payables by the law. In addition, KE is collaborating with NEPRA to expedite the resolution of pending quarterly tariff variations, including expenditures instead of recovery loss, from 2017 to 2021.
A long-term solution to these difficulties and timely approvals remain crucial for the company’s long-term viability and execution of the planned investment.
