KE says issues of receivables, payables required to be resolved for its sustainability

ISLAMABAD: Karachi Electric (KE) said on Wednesday that its sustainability will be in jeopardy if issues related to receivables and payables are not resolved. As of September 30, 2020, KE’s net receivables from various federal and provincial entities, stood at over Rs 80 billion on principal basis. The amounts claimed by SSGC and NTDC / CPPA-G are grossly inflated through the inclusion of disputed mark-up, which is a sub-judice matter, pending judgment from the courts. An official told a select group of journalists that GoP’s outstanding dues towards KE are of over Rs 30 billion owed by the Karachi Water & Sewerage Board (KWSB) as of September 30, 2020 which is fully reconciled. Due to KWSB’s strategic importance to Karachi, KE continues to prioritise power supply to KWSB pumping stations and other Public Sector Entities essential for running the city. “There are commitments from the Government of Sindh (GoS) to pay KWSB’s current bills, as well as orders from the courts in this regard,” he added.

Despite the continued accumulation of KE’s receivables from government entities and departments, the company has ensured payments of current monthly bills to key fuel suppliers and IPPs, including SSGC and PSO, to ensure continuity of business operations, he further stated. Considering the continuous accumulation of Tariff Differential Subsidy (TDS) claims, receivables from the GoP and its resultant impact on the company’s cash flow position during the year, an amount of Rs. 25 billion out of the pending TDS receivables was released to KE in accordance with the approval of ECC in its meeting held on March 26, 2020. Before the year’s end a further Rs 6 billion with respect to Small & Medium Enterprises (SME) package provided to consumers by KE on behalf of GoP related to COVID-19 was also released.

The total release of Rs 31 billion out of GoP receivables helped manage the working capital; and revision in consumer-end tariff effective September 01, 2020 bringing KE’s consumer-end tariff at par with other Discos across Pakistan will further help in this regard. However, KE still has net receivables of over Rs. 80 billion from various government entities, having a consequential impact on the company’s cash flow position, and for which, the company remains in continuous engagements with relevant stakeholders and is seeking a fair and equitable resolution, with all settlements whether federal or provincial, tabled together under one umbrella, including any mark-up. In the case where KE is to pay mark-up on its payables which is a consequence of delays in payments of KE’s receivables by the GoP, then on the basis of reciprocity and on principle of fairness and equity, KE maintains it should also receive mark-up on its receivables on the same basis.

Copyright Business Recorder, 2020