Federal and provincial companies owe K-Electric Rs170 billion

Federal and provincial corporations’ failure to pay K-Electric (KE) has resulted in outstanding dues of Rs170 billion.

The huge receivables have made the country’s sole vertically integrated power provider financially unviable, and affected its future investment plans, said KE’s Chief Financial Officer (CFO), Muhammad Aamir Ghaziani.

The company has declared an approximate Rs2.96 billion loss in FY-2020, primarily due to soaring receivables and higher debt servicing cost.

“Financial viability is critical for continued investment. If KE is rendered financially unviable, sustainable investments may be constrained,” he said.

Responding to a query, he answered that KE’s total receivables from government entities, including Karachi Water and Sewerage Board (KW&SB), National Transmission & Despatch Company (NTDC), and Sui Southern Gas Company (SSGC), are close to Rs170 billion.

KE owes a principal amount of Rs13.7 billion to SSGC while the remaining is markup which is still awaiting final adjudication by the court. He said KE has honoured its payment obligations to Sui Southern Gas Company (SSGC), Pakistan State Oil (PSO) and Independent Power Producers (IPPs), although it has declared a loss of Rs2.96 billion for FY-2020.

“If the long-standing receivables issue continues to remain unresolved, KE’s ability to serve Karachi’s growing power needs would be constrained with serious implications for citizens and industries,” he added.

The financial statements showed that the company had been driven back into financial losses after eight years of profitable operations on account of a 166% increase in financing cost and an exponential surge in borrowing to bridge working capital requirements in the wake of unpaid dues.