KARACHI: The Pakistan Credit Rating Agency Limited (PACRA) has affirmed the entity ratings of K-Electric Limited, the sole vertically integrated power utility in Pakistan. The affirmation comes amid the company's ongoing efforts to ensure a stable power supply across Karachi and surrounding regions, alongside a strategic expansion plan to meet growing energy demands.
K-Electric's Power Acquisition Programme (PAP) for fiscal years 2024 to 2028 outlines an expansive strategy to enhance its generation capacity. Currently, the company generates 2,397 MW and receives an additional 1,600 MW from the national grid, serving a customer base of approximately 3.7 million across a 6,500 square kilometer distribution network.
An approved investment plan of USD 2 billion aims to rehabilitate the transmission and distribution segments by 2030. This initiative is expected to expand the customer base and significantly reduce power outages. The generation segment contributes around 50% to KE's revenue, with the distribution segment close behind at 46%.
Following the expiration of KE's tariff in FY23, the company submitted separate tariff petitions for its various segments. The National Electric Power Regulatory Authority (NEPRA) approved these tariffs, with Generation in October 2024 and Transmission, Distribution, and Supply in May 2025. These approvals are anticipated to enhance KE's long-term profitability.
Pending the release of its post-FY23 financial statements, KE's credit profile has been evaluated using management projections and operational performance. The company's debt service capability is supported by funds in Master Collection Accounts, designated for long-term debt repayment.
KE is also diversifying through its subsidiary, K-Solar, which provides solar installation services, contributing to regional expansion and future earnings. The company's operational improvements include reduced transmission and distribution losses.
The rating watch highlights the delay in finalizing KE's financial statements, attributed to the absence of an approved tariff. Key factors for the company's financial outlook include timely completion of these statements and the impact of recently approved tariffs. The government's shareholding and investments from Saudi Arabia and Kuwait, along with ongoing shareholder discussions, are crucial for corporate stability.
Despite these challenges, KE's operations continue without disruption, with management maintaining effective and independent control.