Karachi Industrial Zones, which are exempted from load-shedding, are expected to face prolong power cuts with the onset of summer as K-Electric has given a rationale for power shortage as a massive over Rs50 billion receivables from the Sindh government.
Official sources in KE told Business Recorder that the cash flow constraint are hampering KE's ability to run operations, especially honour its fuel and power purchases, besides meeting the growing power supply demand of the city.
The non-release of dues from government entities may lead KE to default on its payments to key fuel suppliers, including the Pakistan State Oil (PSO) and the Sui Southern Gas Company Limited (SSGCL), from May.
KE's borrowings have already reached unsustainable levels, and it fears that banks may not lend to it any further due to limits. Lack of borrowing and cash flow constraints hamper KE's ability to invest, and thus limiting the ability to upgrade infrastructure, they said.
Sources said the company is to carry out load-shedding anywhere from 2 to 3 hours for low loss areas, and industries would also face a few hours of load-shedding.
KE borrowings have significantly increased from Rs49 billion in the fiscal year 2016 to Rs126 billion in January 2020, including the recently issued sukuks of Rs25 billion, the officials said.
"We would be left with no choice but to increase the hours of load-shedding across the city, including the industry," they warned. "KE's total receivables from the provincial government have crossed Rs50 billion." They said the Sindh government had made written submissions in the Supreme Court of Pakistan, wherein they committed to pay current monthly bills of the KWSB (approximately Rs500 million) and devise a payment schedule for the payment of arrears (outstanding dues) of the KWSB.
Various letters have been sent to the Sindh government but no payment structure/plan has so far been provided.
On the other hand, a spokesman for the Energy Ministry of Sindh termed KE's claim [of Rs50 billion dues] as "exaggerated and misleading", saying the provincial government's departments and ministries were paying KE bills on a regular basis. However he said that the Karachi Water and Sewerage Board (KWSB) had to pay dues to the power utility.
He said a KE team recently met the Energy Minister, Imtiaz Ahmad Shaikh, and another provincial minister, Nasir Hussain Shah, wherein the two parties evolved a payment mechanism.
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