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K-Electric posts loss of Rs16.3 billion in first quarter of FY23

K-Electric posts loss of Rs16.3 billion in first quarter of FY23

K-Electric posts loss of Rs16.3 billion in first quarter of FY23

K-Electric posts loss of Rs16.3 billion in first quarter of FY23

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KARACHI: The challenging geopolitical and macroeconomic factors have had a cascading impact on K-Electric which grapples with immense challenges during the first quarter of fiscal year 2023.

The company recorded a net loss of Rs16.3 billion in the first quarter of fiscal year 2023, compared with the net profit of Rs2.9 billion during the same period of fiscal year 2022.

Despite the challenges it faces, K-Electric continues its strides towards operational enhancements and its transmission and distribution losses improved by two percentage points to stand at 15.8 per cent at the end of the first quarter of fiscal year 2023 from same period of last fiscal year.

Surging inflation, policy rate hike, reduction in economic activity and adverse exchange rate variations had a significant impact on the utility’s operations and profitability.

The company observed a reduction in units sent-out by 8.9 per cent on account of reduction in economic activity, huge exchange loss owing to rupee depreciation and an increase in impairment loss against doubtful debts due to high inflation, increase in consumer tariff, high fuel charges adjustment (FCA) and current economic conditions impacting consumers propensity to pay.

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An additional burden is being placed by surging finance cost on account of increased ineffective rate of borrowing and higher levels of borrowing due to non-payment of dues by government entities which have surged to an alarming level of Rs80.4 billion on net principal basis.

K-Electric operates under regulated tariff and as per current Multi-Year Tariff effective from July 1, 2016, while no adjustment is provided to the company in tariff for changes in sent-out and policy rates.

During the period of extended monsoon, the company’s network and power infrastructure remained resilient and reliable. Over 40,000 metres have been provided during the quarter to inculcate a culture of metered billing.

The power utility has also stepped up to support those affected by the widespread flooding following the recent monsoon spells.

The company’s employees contributed Rs2.7 million from their salaries which was matched by the management to help people in Sindh and Balochistan.

Under National Electric Power Regulatory Authority’s (Nepra) corporate social responsibility (CSR) vision of Power with Prosperity, K-Electric has donated Rs7.5 million to Akhuwat’s solar microfinance fund out of which Rs5.7 million has been utilised for 35 beneficiaries.

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The second cohort of K-Electric’s Roshni Baji Programme also completed their graduation.

The company is also working on the renewal of the tariff for the next control period starting from July 1, 2023, with an aim to obtain a sustainable, cost reflective and investment enabling tariff with adjustment mechanism at par with other power sector entities.

Further, the company remains engaged with the government for sustainable resolution of the government receivables issue as the same is severely impacting the company’s cash flow position and the bottom line.

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