Lahore, December 08, 2022 (PPI-OT):The ratings incorporate the strategic importance of K-Electric Limited, (“the Company” or “KE”) being a vertically integrated power utility, responsible for the generation, transmission, and distribution of electricity in Karachi and adjoining areas of Sindh and Balochistan. Support has been drawn from the sustained rather improved performance metrics of the Company, owing to the growing demand for electricity and continuous improvement across various operational metrics including a reduction in T and D losses and a better recovery ratio.
KE showed improvement in revenue in FY22: PKR 518,777mln (FY21: 325,048). However, the decline in net profit of the Company was observed on the back of a significant increase in fuel prices, exponential finance cost, increase in significant rupee devaluation and increase in Tariff differential. Working Capital also remains a challenge because the delayed payments from the government resulted in enhanced borrowings ultimately curtailing profitability because of increased finance cost. The Company is pursuing its 900 MW RLNG project on a fast-track basis in Unit-I and II of 450 MW each.
Unit-I is currently offline due to some technical faults identified during a test in Sep’22 and the team of global experts has been tasked to resolve this on priority while unit-II is still in a testing phase and expected to be commissioned by the end of Dec’22. The generation capacity of the Company will increase and being an efficient plant, electricity will be produced at a lower rate which would have a positive impact on the working capital of the Company.
The expected increase in generation fleet efficiency and additional power purchase from GoP, are imperative for the ratings, going forward. At the same time, upholding business and financial metrics is of utmost importance.
For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com