Wednesday March 22, 2023

KE performing well despite huge losses

October 04, 2020

KARACHI: State-owned electric distribution companies are contributing around 25 percent to the circular debt which now stands at Rs2.4 trillion. Interestingly, K-Electric does not contribute a penny to this gross problem.

Had KE performed as badly as various Discos, the circular debt would have been close to Rs3 trillion. This means by performing well, K-Electric has saved Rs600 billion.

But despite performing well K-Electric’s financial agonies have increased to unsustainable levels and its financing cost has soared by Rs16 billion a year, a top KE official informed a select team of media on Saturday.

The quarterly tariff determinations for KE from April 2019 to March 2020 are still pending with an impact of Rs122 billion and these include write-off claims for FY-17 and FY-18 are also pending which was due in financial year 2019.

In the wake of the liquidity crisis, KE has to borrow loans for continuation of its operations for which the financing cost has increased by Rs16 billion per annum. And since long it has not given dividends to its shareholders. KE earned Rs8 billion in the last fiscal only. He said that under the given situation KE performed well and reduced the losses to 19 percent from 34 percent and the gains were passed on to the consumers. KE has invested in the system Rs335 billion earned through efficiency gains since 2005.

The Chinese company, Shanghai Electric Power (SEP) is still interested to purchase KE, but the uncertainty over vibes coming from Nepra to do away with exclusivity of KE in Karachi will jeopardise the expected sale proceed and to this effect it has written a letter to Privatisation Commission asking for maintenance of KE exclusivity otherwise it will not be able to purchase its share of 66.4 percent.

When asked if KE is planning to make effective modus operandi to face the situation like it experienced during the unprecedented rains, he said that though it is not possible to handle such abnormal situation, but the city has faced 294 millimetre rain in one day in the last 90 years time.

Meanwhile, amid the lofty challenges of Kunda and theft culture backed by untouchable mafias, in the post privatisation scenario, KE is a success story if compared with any state owned electric power distribution as it has scaled down the line losses to 19 percent from 34 percent and investing over Rs335 billion in the system. KE is now geared up for making fully functional its new brand gas power plant of 900MW in December 2021.

KE carved out an investment of Rs250 billion plus for next three years till 2023 under which it will increase electricity generation up to 4,511MW and build more grids up to 78 and increase distribution capacity to 8,794MVAs and increase the LS Exemption Feeder up to 93 in numbers.

However many in marginalised areas still deem it as a monster on account of host of issues that include more surge in the hours long loadshedding in the wake of substantial reduction in gas supply to power plants and complete blackout in abnormal situations like urban flooding supported by unprecedented rains.

The KE has successes, but still it has failures in installing more generation plants which led to the power deficit resulting in huge power outages particularly in summer season that overshadows the good deeds of the entity. KE wanted to install a 700MW coal-based power plant and Nepra to this effect extended tariff for the project, but the federal government did not notify it which is why the entity failed to install the project. The Power Division came up with the second thought that KE install a power plant based on Thar coal at Thar which was not feasible for KE.