Mid term review decision, severe rupee devaluation hit KE's profitability.

Driven by continued and targeted investments of PKR36.99 billion across the power value chain, key operational indicators showed positive growth over comparative period. However, despite showing consistent improvement in reduction of transmission and distribution losses of 1.5%, and driving an increase in the units sent out by 2.8%, KE's net profitability declined by 84% to settle at PKR 1.5 billion in relation to last year's PKR 9.44 billion.

The impact of KE's operational performance was set-off by negative impact of Pakistani rupees' substantial devaluation in the international currency market resulting in exchange loss of PKR 4 billion in comparison to last year's gain of PKR 1.2 billion along with an increase in financing cost by PKR 1.4 billion due to increase in effective rate of borrowing and Mid-term review (MTR) decision.

As of March 31st 2022, KE's net receivables from various Federal and Provincial government entities stood at PKR 53 billion on principal basis. Delays in reconciliation and release of legitimate payments from these entities are severely affecting the Company's cashflow position and ability to further accelerate investment in key power infrastructure. Further, on March 01, 2022, NEPRA issued its decision on KE's MYT Mid-Term Review, wherein NEPRA made a downward adjustment of PKR 0.22/kWh on the utility's determined tariff and disallowed an additional investment of PKR 138 billion by KE to improve on its services including power supply and reliability.

An important update for this quarter is the finalization and deployment of KE's 900 MW RLNG-based power project, BQPS-III. The first Unit of 450 MW proceeded with its mandatory testing in March 2022 as well as synchronization with KE's Grid, and is now in the final testing stages before commissioning.

KE has also upgraded its infrastructure in its service areas to keep pace with and facilitate the economic growth in the city's peri and suburban regions. Aside from rehabilitation, the grids in Winder are being enhanced and the 66kV line upgraded to 132 kV along with commissioning new lines to improve transmission capacity and reliability in the region. Additionally, to improve on capacity and systemic reliability, 6 new power transformers have been integrated into the network to ensure reliable power supply to consumers across Karachi.

On the distribution front, the Company continued to make strides on its loss reduction efforts. Over 200,000 KG of illegal hooks...