Research Analyst
Feb 02 - 08, 2009

The Karachi Electric Supply Company Ltd (KESC) engages in the generation, transmission, distribution of electric energy to industrial, commercial, agricultural and residential consumers in Pakistan. In November 2005, the privatization of the KESC has been finalized with the transfer of 73% shares of Government of Pakistan along with Management Control to the new owner viz M/s KESC Power & others. New investors include KES Power Limited, Hassan Associates (Private) Limited and Premier Mercantile Services (Private) Limited who hold 71.5%, 1.00% and 0.5% shares in the capital of Company, respectively. KESC operates as a subsidiary of KES Power Ltd.

(mn KwH)
Units generated KESC 2,291 2,416
Unites sent out KESC 2,117 2,235
Units purchased 1,899 1,953
Total units available for distribution 4,016 4,188
Units billed 2,667 2,696
Transmission & Distribution Losses 33.6% 35.61%
Govt. of Pakistan 3,403,763,472 25.65%
New Investors 9,611,964,737 73.00%
Others 151,346,774 1.35%
Total 13,167,074,983 100.00%
Source: KESC


Sale of Energy 16,270 13,705
Other Revenue 437 489
Gross Revenue 16,707 14,194
Cost of fuel & power purchase -(Net of Subsidy) (18,535) (14,632)
  (1,828) (438)
O&M Expenses (2,689) (2,490)
Provision for doubtful debts (375) (338)
Depreciation (946) (888)
Financial & other charges (750) (494)
(Loss) before tax (6,588) (4,648)
Loss per share Re. (0.50) Re. (0.36)
Source: KESC

The Financial performance of the KESC shows the key business performance of the company. The company's own generation has decreased by 5.15% during the period Jul-Sep 08 over the corresponding period last year. Total KESC units sent out decreased by 5.25% as a result of 5.15% reduction in KESC generation. Power purchases were decreased by 2.78% over corresponding period last year due to short supply from WAPDA by 5.4%, which was offset by increased purchases from other sources. Total units available for distribution decreased by 4.11%, whereas units billed decreased by only 1.08% as compared to 4.11% lesser number of units available for distribution which were contributed through significant reduction of 2% in T&D losses from 35.61% in Jul-Sep 07 to 33.60 in Jul-Sep08. Revenue from sale of energy has gone up by 18.7% due to enhancement of average selling rate by 10% and 35% on account of tariff increase allowed by NEPRA from 01 March 2008 and 01 September 2008 respectively. Cost of power purchases increased by 24.28% despite 2.78% reduction in number of units purchased which is exclusively attributable to significant increase in furnace oil price registered during the period which translated into additional financial burden on the Company in respect of power purchases from furnace oil based IPPs. Operation & Maintenance (O&M) expenses increased by 8% mainly due to enhancement in pay and allowances given to the employees of the Company, repair & maintenance cost of generation facilities and T&D infrastructure whereas 52% increase in financial and other charges over corresponding period last year is attributable to interest on delayed payments to SSGC and increased bank borrowings. Loss before tax, as a result of cumulative impact of contributing factors as above, increased by41.74% from Rs.4, 648 million to Rs.6, 588 mn.


Currently, the KESC wants to do automation of billing system, energy management systems, advanced metering solutions and automation of the transmission network (Aerial Bundled Cables, Automatic Meter Readers, etc). The company wants to improve customer service through improving 118 call centers, adding doubling the number of call centers, as well. KESC is reviewing the meter problems faced by the consumers. The company is also focusing their key relations with key stakeholders like SSGC, PSO, City Government, labor unions and lenders and has agreed on payment plan with WAPDA which has already paid Rs1 bn.


In December 2008, Management at Karachi Electric Supply Company has introduced a facilitation desk service, to be set up at the offices of various trade and industry associations in Karachi. These desks are an extension of KESC's rapidly improving customer facilitation initiative and have been set up in response to a need expressed by commercial and industrial consumers for the resolution of current billing issues, as well as to provide a point of contact for the industry to liaison with the Company for any other KESC related matters. The desks, to be manned by KESC officials, will be set up at the offices of KATI, SITE, Federal B Area, North Karachi and KCCI, effectively covering all commercial and industrial organizations operating within the jurisdiction of KESC. Residential and non-commercial consumers can continue to utilize the large network of KESC Customer Service Centers spread across the city.


KESC serves the electricity needs of Pakistan's largest city Karachi and its surrounding areas, with a 2.2million strong customer base. It has a licensed network spanning 6,000 square kilometers. Through a combination of self generation and power import from IPP's and the national utility WAPDA/NTDC, KESC's total supply capacity is approximately 2,344 MW. Presently, KESC faces shortage of 100 to 300 MW on daily basis in the city. It is estimated that the $361 million is investing in the KESC while in coming three years this investment will be increased to $1billion. The company needs to do electricity conservation for increasing population so that in future it won't suffer.

No doubt load shedding is the biggest challenge for the government of Pakistan as it is directly affecting the business environment of Pakistan and increasing the business costs.