K-Electric profit surges 119% in 2014-15

Income rises due to enhanced plant efficiency, reduced line losses

KARACHI: Besieged power utility K-Electric recorded a massive rise of 119% in net profit in fiscal year 2014-15, which ended in June this year, as the company cut down on electricity line loss and enhanced efficiency of power plants.

The profit at Rs28.3 billion, compared to previous year’s Rs12.9 billion, comes following weeks of criticism of its performance at the start of summer.

K-Electric, which serves Karachi and its suburbs, also saw improvement in gross profit margin, which increased to 22.7% compared to 16.55% in fiscal year 2014.

“We are moving ahead,” said K-Electric CEO Tayyab Tareen, while talking to The Express Tribune.

“There has been improvement in all areas; transmission and distribution (T&D) losses have come down, plant efficiency is good and financial charges have also been reduced,” he added.



Expressing satisfaction over the performance, Tareen said cash flows were improving and would help in undertaking future investments.

“Conversion of power plants from the simple-cycle model, which consumes more energy, to the more efficient combined-cycle technology is also adding to the profits.”

Tax credit of Rs13.2 billion might seem to have bloated the bottom line but the company says it is the result of investments in plant and equipment made in the last few years. K-Electric still has available tax credit of Rs80 billion.

“But even without the tax credit, the profit was up 57%,” Tareen said. “T&D losses have come down to 23.7% from 25.3% in the previous year.”

According to rough estimates, a 1% reduction in T&D loss, which is the result of power theft, results in Rs2.5 billion savings for the company.

Successive yearly losses due to rampant theft and poor management were the key reason for privatising the utility in 2005.

Published in The Express Tribune, August 21^st,  2015.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.