KE in serious financial crisis: CFO

ISLAMABAD:  Karachi Electric (KE) is reportedly in a serious financial crisis due to non-payment of receivables by governments, well-informed sources in KE told Business Recorder.

The company’s Chief Financial Officer (CFO), Aamir Ghaziani, has brought its financial position to the notice of the federal government, which resisted sales of its shares to China’s Shanghai Electric Power Company Limited subject to clearance of its receivables. In a letter with reference to prevailing situation due to Coronavirus (Covid-19) pandemic and the relief package announced by the Prime Minister to tackle slowdown in the country, KE said that it is fully cognizant of the important role that it plays in Karachi and service it provides to its residents and is exerting all efforts to ensure smooth operations in the city. KE continues to work tirelessly to manage routine operations and maintenance which include the purchase of fuel and power, however, considering the severe cash flow constraints highlighted before and also through its letter of March 21, 2020, it is foreseeing severe constraints in running day-to-day operations and ensuring seamless supply of power to the city.

 In this regard, KE has reiterated that receivables from the Government of Pakistan in respect of Tariff Differential Subsidy (TDS) alone, have reached an alarming level of around Rs 193 billion( February 2020).  Further as a result of continuous accumulation of receivables from government entities and departments, KE’s borrowings to manage working capital alone have increased substantially to a level above Rs 120 billion already. “The situation is no longer sustainable for the company, with capacity of banks to finalize KE having been exhausted, thus putting the operational sustainability of the company at risk. We request immediate support from the GoP in this respect,” he added.

The power utility further stated that within the relief package announced by the Prime Minister on media, those consuming up to 300 units are facilitated through payment of their bills in three installments. However, detailed modalities of this package including eligibility have not been given.

“We understand that Power Division would issue directives in writing in this regard for implementation by all Discos including KE,” he continued.

In view of the current crisis situation due to Covid-19 to ensure maximum relief to the consumers, due dates of all bills of Rs 4,000 and below have already been extended till April 10, 2020 which covers all the residential consumers with consumption of upto 300 units.

The power utility has reiterated that it remains committed to its obligation of providing safe and reliable supply of power and ensure maximum possible facilitation to its consumers and accordingly, requested the Power Division to provide detailed mechanism regarding implementation of recovery from those consuming upto 300 units in three installments in writing so that it can be implemented. “We urge the GoP to provide immediate resolution of our outstanding receivables which pose a severe threat to the operational sustainability of KE,” he added.

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