K-Electric profit declines 29pc to Rs8.5 billion in FY22

Our Correspondent
Thursday, Sep 22, 2022

KARACHI: K-Electric (KE) has announced financial results for the year ended on June 30, 2022, with a decline of 29 percent in its net profit as compared to the previous year, weighed on by external factors such as increase in consumer tariff and current economic condition of the country, which impacted consumers’ affordability to pay their bills.

The utility company posted a net profit of Rs8.524 billion in FY2022, against Rs11,998 reported in FY2021. The earnings per share (EPS) for the year remained 0.31 rupee per share, as compared to EPS of 0.43 rupee in FY21.

“External factors including increase in consumer tariff and current economic condition impacting consumers’ propensity to pay lead to increase in impairment loss, substantial devaluation of Pakistani rupee in the international currency market resulted in exchange loss, and an increase in policy interest rates translated to an increase in finance cost,” the company statement said.

KE’s gross profit increased by 22 percent as compared to the last year, driven by operational improvements, it added.

Transmission and distribution losses of the company reduced from 17.5 percent to 15.3 percent in FY2022. A negative impact on account of mid-term review decision affected the performance, KE said.

The last quarter of FY2022, in particular, saw material socio-political challenges, both locally and on the international front, having a consequential impact on the macroeconomic factors, it stated.

"The previous fiscal year brought some unique challenges and put the power sector to test. Our company-wide focus on embedding digitisation and automation into our core business processes enabled KE to maintain its agility and sustain its commitment to the people and city of Karachi,” said Moonis Alvi, CEO of K-Electric.

Continued investment had demonstrated improved network stability during an unprecedented monsoon season, and the company reduced its network losses to deliver power, Alvi stated, urging the government to address legacy issues, which could help actualise potential and contribute positively to transformation of the power sector.

Investments of around Rs62.8 billion were channeled across value chain of the electric power utility during FY22, including initiatives to increase system reliability and meet the city's growing power demand.

KE said it had commissioned a black start capability at Korangi Combined Cycle Power Plant, enhancing its technical ability in contingency situations and reducing reliance on independent power producers.

During the year, KE said it had expedited the process of setting up new grids and interconnection works, which would enable drawl of additional power from the national grid besides the 1,100 megawatts currently being evacuated.

In that regard, the process for setting up of new grid at 500 kilovolts level was in the offing, it added.

According to KE, the construction of the new 220kV Dhabeji Interconnection is also “in full swing”. Upon completion of the grids and interconnection works, the company would be able to import additional power from the national grid taking the total drawl to 2,050MW, which might enable it to better manage the demand in upcoming years alongside enhancing system reliability, the company said.

On the distribution front, the company said it had continued to make headways across various distribution projects.

KE claimed that it had achieved all its goals as budgeted and beyond for commercial and technical targets, which included lowering distribution loss and outages and improving recovery, system average interruption duration index, and system average interruption frequency index.

The utility company has concern on current circular debt situation, saying it affected the sector’s suitability. Delay in release from government entities, including tariff differential subsidy continued to cause accumulation of receivables and adversely impacted the liquidity, it said.