Lights out? KE asks CM Sindh to clear arrears to continue operations

Sindh govt maintains it’s the Centre, KMC and DMCs who owe dues to the power utility company

KARACHI: K-Electric (KE) has written to the Sindh Chief Minister (CM) Syed Murad Ali Shah yet again seeking payment of dues owed to the power utility company by the Sindh Government. The letter sent earlier this month, a copy of which is available with The Express Tribune, states that non-payment of the unpaid arrears could result in a potential power crisis for the city as KE has been taking loans to ensure the smooth functioning of its operations and now the capacity of banks to finance KE "has been exhausted". KE CEO Syed Moonis Abdullah Alvi has urged the CM to expedite payment of dues so that the power utility company can ensure payments to its suppliers and continue operations.

Meanwhile, harping on the same string, the Sindh government has assigned the responsibility of the unpaid dues to the Centre and the local bodies. It maintains that on its part, the provincial government has no outstanding arrears. The provincial energy minister did, however, express sympathies with KE's situation and added that his department awaited directives from the CM.

Outstanding dues

According to the letter, dated December 3, 2019, KE's receivables from various entities and departments of the provincial government now stand at Rs19.2 billion, of which Rs4.5b have been reconciled. Another Rs33.09b is owed by the Karachi Water and Sewerage Board (KWSB), of which Rs28.5b has been reconciled, states the letter. The reconciled amount refers to the amount of the total unpaid arrears, which has been agreed upon between the two parties as to be paid by the Sindh government to the power utility company. A summary of this has been submitted before the Supreme Court (SC).

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Alvi has reminded the CM that the provincial government had "agreed to devise a payment plan for the reconciled amount, which was also made part of SC's order". He further states that there have been significant delays in the payment of the reconciled amount and the payment plan is also awaited.

'Unsustainable'

The CEO has mentioned that similar letters have been sent by him to the CM on April 9, May 13 and October 1 of this year. The letter states that the CM's office has been informed repeatedly that given the pending amount in receivables from the Sindh government, KE is facing constraints in its day to day operations and is struggling to ensure a "seamless supply of power to the city". According to Alvi, "as a result, KE's borrowing has increased substantially, and the situation is not sustainable for the company". He adds that resources such as loans from banks have been exhausted now and KE's working capital and long-term expansion plan is being affected.

The letter further states that the power utility company has "not been a defaulter of current payments to any of its fuel suppliers since 2012, despite the cashflow situation". Alvi has urged the CM to expedite payments of unpaid arrears so that KE can continue making payments to its suppliers. He has further requested the CM for a meeting so that Alvi and his team can apprise the CM of the situation in detail.

'It's not on us, ask them'

Speaking to The Express Tribune, Sindh Energy Minister Imtiaz Ahmed Shaikh maintained that the Sindh government has been paying all provincial departments' bills regularly. "The only outstanding dues are the old bills of the KWSB," he explained. And, he added, those dues will be paid by the federal government, not by the province. He said that the KWSB's outstanding bills are due from when it was directly under the control of the federal government.

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Shaikh also said that the Karachi Metropolitan Corporation and the district municipal corporations were not paying dues to the only power supplying company in the city. "Sindh government provides them grants, including everything, but they want us [Sindh government] to pay their electricity bills," he said.

The energy minister was of the view that there was a mechanism in place for paying arrears to KE. He said that all the power supplying companies across Sindh, including Sukkur Electric Power Company and Hyderabad Electric Supply Company, were receiving their payments on time.

"I understand the financial issue KE is facing right now," Shaikh said. "It's the only power supplying company in the city and we'll be in trouble if it stops its operations due to non-payment," he said. "We can reconcile if the CM orders us for this issue."

Published in The Express Tribune, December 15^th, 2019.