Wednesday, 27 June 2012 12:11
KARACHI: Cash strapped Karachi Electric Supply Company (KESC) has mortgaged at least its 12 grid stations in order to get Rs 2 billion loan from private firms/banks for five years.
With the new loan received through its recently announced Term Finance Certificate (TFC) programme, KESC's payables have ballooned to around Rs 255 billion. The company, which was privatised with zero loan or debt, has also allocated at least 250 consumers which according to the set procedure would be paying monthly dues to the private firms, including Pak Brunei Investment Company and Standard Chartered Bank, in order to pay the interest on loan, Business Recorder learnt on Tuesday.
The fresh loan has been obtained at the interest rate of 15.50 percent per annum for the five-year. KESC will pay at least Rs 3.55 billion against Rs 2 billion loan in five years. The interests of the amount has been planned to be paid as Rs 310 million and Rs 25 million per year and per month, respectively to the loan giving organisations.
According to sources, the two private firms, which agreed to provide the required funds to KESC, have, however, asked the power company to guarantee paybacks and interests before going to any formal deal. To satisfy the loan giving companies KESC has mortgaged the grid stations in various parts of the city, besides the arrangement of hundreds of selected consumers who would pay the monthly charges to Chartered Bank directly. The millions of rupees worth monthly bills would be paid by the consumers as interests of the amount received by KESC from two firms.
The mortgaged grid stations are included, Civil Aviation Grid Airport, Baloch Colony Grid, F.B Area B (A) Grid, F.B Area B (B) Grid, Gizri Grid, Airport Grid, Hub Choaki Grid, Queen Road Grid, Korangi East Grid, Lyari East Grid, North Karachi Grid and North Nazimabad Grid.
Interestingly, some of the consumers, mostly industrial, who have been issued notices by KESC to submit the monthly bills in a separate account at Standard Chartered Bank created for payment of the interest, were also not ready to follow the fresh instructions as it could add their sufferings.
The total payables of the company have swelled to at least Rs 255 billion, as according to the company's financial report July to December, 2011. The total liabilities were Rs 253 billion, which included trade payables, loan, outstanding dues the purchases made by the company like power, fuel, gas and furnace oil etc. The receivables of the company, according to the report, were Rs 28.4 billion against the huge liabilities.
According to official source, KESC has already obtained billions of rupees worth loans from, International Finance Corporation, Asian Development Bank and local banking consortium while mortgaging the company's properties.
They have further their apprehension that the government might be paying the huge liabilities if the management of KESC leaves the company as according to the amended agreement's Article 8.6 "Government of Pakistan 'in case of take over of the company' would pay all liabilities (past and future) of KESC.
It is worth mentioning here that KESC had finally launched TFC worth Rs 2 billion to the general public, making it the second company to enter the bond market after Engro Corporation.
Earlier, the company had claimed that TFC was corporate bonds issued by companies to generate short and medium-term funds. Investments received will be utilised for financing KESC's permanent working capital requirements. KESC executives had earlier expected to announce the offering in November 2010. The certificate called AZM was available in three maturities. Profit rate for the 13-month issue was fixed 13 percent per annum, 14.75 percent per annum for the three-year issue and 15.50 percent per annum for the five-year issue. Principal repayment of the investment would be available at maturity.