Karachi: K-Electric (KE) held its 109th Annual General Meeting (AGM) – FY 2019 in Karachi. With the on-going COVID-19 pandemic, the utility’s AGM was hosted virtually for the first time. The meeting was chaired by Riyadh S.A.A Edrees, Chairman of the KE Board, with Moonis Alvi, CEO KE also in attendance, along with Aamir Ghaziani, CFO; Rizwan Dalia, Company Secretary & CPO and other members of the Board and KE leadership.

Shareholders were briefed about improvements in certain key operational indicators such as sent-out growth and decrease in Transmission and Distribution (T&D) losses. KE’s balance sheet continued to grow, with total assets increasing to around PKR 599 billion in FY 2019, compared to PKR 474 billion in FY 2018 because of the Company’s continued investment to meet the city’s growing power needs.

Shareholders were told about prevailing challenges such as the circular debt, which remains a key concern and a severe drain on cash flow, as well as the Company’s negative operating cash flow, increased finance cost, enhanced bank borrowings and distressed working capital situation due to accumulation of government receivables. This, coupled with exchange losses due to significant devaluation of PKR during FY 2019, has impacted profit before tax of the company which fell from PKR 13.7 billion to PKR 8.9 billion year-over-year. As of April 2020, the Company’s outstanding net receivables from various Federal and Provincial Public Sector Entities, on principal basis, ballooned to PKR 89 billion. Additionally, because of the COVID-19 outbreak and the ensuing lockdown, economic activities have almost ground to a halt and the resultant logistical and fiscal bottlenecks have had an added impact on the Company’s finances.

The Company’s profit after tax increased to PKR 17.3 Billion in FY 2019 from PKR 12.3 Billion in FY 2018, with the improvement driven in part through efficiency gains by way of reduced T&D losses (from 20.4% in FY 2018 to 19.1% in FY 2019) and growth in sent-out units by 1.6% along with deferred tax adjustment. However, during the year, finance cost increased by 94% due to increased working capital requirement on account of substantially increased borrowings to above PKR 120 billion and continuous accumulation of government receivables and delays in determination of tariff variations.

Shareholders were briefed on steps KE has taken to provide relief to its customers which are more vulnerable to the impact of COVID-19, through deferred bill payments, extension of prepaid electricity to certain Commercial and Industrial Consumers and provision of uninterrupted power supply especially to all critical sites, key healthcare institutions and key government functions etc.

Through the growing strategic and operational challenges, KE is making continuous strides towards efficiency improvements and additions to its own generation fleet as well as external sources. KE is setting up a 900 MW RLNG based highly efficient power generation plant at its Bin Qasim Power Complex (BQPS-III) comprising two 450 MW units, running on the Combined Cycle Gas Turbine (CCGT) configuration.

KE has also completed over 90% of the TP-1000 project expected to be completed later this year. This has added over 900 MVAs to power transformation capacity. Moreover, the Company has revisited safety procedures and practices for grounding to make them less prone to theft. Additionally, the Company is undertaking revalidation of grounding of its network by examining each and every pole within the KE system with a tagging of the same in the system.

Shareholders were also apprised of the improvements made across the entire energy value chain through investments of more than USD 2.4 billion since 2009, which includes the addition of 1,057 MW of power generation, 7% points improvement in overall fleet efficiency as well as a 16.8% points reduction in T&D losses. Apart from this, transmission capacity has been increased by 42% and distribution capacity by 64% over the same time frame.

The Company continues to rehabilitate and upgrade its network, including the conversion of around 8,000 PMTs to Aerial Bundled Cable (ABC) to combat the menace of power theft, which has resulted in more than 70% of the city and 100% of industries being exempt from load-shed. Safety remains a top priority for the power utility, both for its employees as well as its customers. In this regard, the company will remain engaged with all relevant stakeholders including policymakers, regulatory bodies as well as civic entities to cope with and overcome challenges that arise from a substantial portion of Karachi being unplanned and rife with encroachments, which are major factors in undermining the integrity and reliability of the power infrastructure.

At the AGM, shareholders endorsed the Company’s financial statements for the fiscal year ended June 30, 2019 and approved the decision to reinvest the profit back into the business.