KE reaffirms commitment towards Karachi with $3 billion investment

KARACHI: K-Electric is committed towards Karachi and its growth with an investment of $3 billion over the next four years including the 900 MW RLNG-based BQPS-III, a 700 MW coal-based IPP project and addition of about 1,000 MWs through IPPs. This was stated by Aamir Ghaziani, Chief Financial Officer of KE at the Corporate Analyst Briefing session held at the Pakistan Stock Exchange (PSX) today.

The participants were also informed about the company’s financial performance and continued operational improvements including growth in sent-out, significant reduction in T&D losses and sustained improvement in recovery levels. These improvements were underpinned by investments of more than $2.4 billion from FY 2009 to FY 2019, in all business verticals, including investments of over $960 million in the last three years alone.

KE CFO also said that to maintain this growth momentum, KE’s planned initiatives would translate into investments of around $3 billion across the value chain over the next four years. He further said that the company’s over $450 million TP-1000 project was on course for successful completion, adding about 1,000 MVAs of transmission capacity through seven grid stations and associated power lines and systems. Four grids and 22 power transformers have already been energized under TP-1000 project.

This will be followed by TP-2, which will further improve network reliability and enhance KE’s transmission capacity. The power utility’s plans to enhance distribution capacity through the addition of 300 feeders and over 5,000 transformers were also discussed at the session, as well as planned investments in the reliability of KE’s network and loss reduction through the conversion of 15,000 PMTs to Aerial Bundled Cable (ABC) by 2023.

KE obtained syndicated financing of up to Rs25 billion in November 2018 to continue investment on an accelerated basis. Recently, it also issued two Islamic Commercial Papers in August 2019 and September 2019, amounting to Rs8 billion and Rs9.5 billion respectively and is also planning to issue a rated, secured and listed Sukuk of up to Rs25 Billion by April 2020, which will enable the company to continue the positive trajectory of planned improvements.

However, the potential for further improvement through the entry of a strategic investor and its impact cannot be emphasized enough and the participants were informed about Shanghai Electric Power’s (SEP) continued interest to acquire a 66.4 percent stake in KE.

SEP signed a Definitive Agreement to acquire up to 66.4 percent stake in KE in October 2016, subject to government and regulatory approvals. A strategic investor with technical expertise would, among other operational improvements, leverage its strengths to bring technological advancements across the power value chain, benefiting the consumers and economy at large.

The participants were also briefed about Karachi’s peak power demand which has grown at a Compound Annual Growth Rate (CAGR) of 5.2 percent from FY 2012 to FY 2018, compared to 2.4 percent for the rest of the country, and how this bodes well for the future growth potential for KE, underpinned by its aggressive and strategic investment plan for the next four years.

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