Karachi: K-Electric Limited has been assigned preliminary ratings for its inaugural Retail Utility Sukuk worth PKR 3 billion, reflecting its strategic expansion and financial plans. The Pakistan Credit Rating Agency Limited (PACRA) awarded the sukuk a long-term rating of AA and a short-term rating of A1+, with a stable outlook. The sukuk aims to address liquidity gaps amid ongoing tariff reviews and operational investments.

According to PACRA, K-Electric is Pakistan's sole privatized and vertically integrated power utility, managing generation, transmission, and distribution. The company is implementing a Power Acquisition Programme for fiscal years 2024 to 2028, aiming to increase capacity to meet growing energy demands. Additionally, a USD 2 billion investment plan for transmission and distribution from fiscal year 2024 to 2030 targets a 30% growth in the customer base, a 20% increase in renewable energy share, and a 30% reduction in power outages.

The company faces a delay in finalizing its financial statements for fiscal year 2024 due to ongoing tariff reviews. It has filed a Multi-Year Tariff with separate petitions for generation, transmission, distribution, and supply. While the generation tariff was approved in October 2024, the others remain under review. KE continues to engage with regulatory bodies, including NEPRA, SECP, and PSX, to expedite approvals.

The sukuk, which is unsecured and short-term, will offer investors the option to receive profit payments as adjustments to their monthly utility bills if they are KE consumers. This instrument has a one-year tenor and will repay the principal at maturity. The outcome of the Multi-Year Tariff review process is crucial for maintaining the assigned ratings and assessing K-Electric's financial and operational performance.