PACRA Assigns Initial Ratings to K-Electric Limited - Retail Utility Sukuk - PKR 3bln - TBI - Sep'25

K-Electric Limited (“KE” or “the Company”) is a strategic national asset and only vertically integrated power utility of the Country, dedicated to ensure power supply across its licensed areas, which include Karachi, surrounding regions of Sindh, and parts of Balochistan. On the regulatory front, NEPRA notified the decision of Generation tariff on December 4, 2024 and decisions of Transmission, Distribution and Supply tariffs on July 18, 2025. Following the regulatory approvals, the financial results for financial year 2024 were prepared and notified to PSX upon approval of the Board of Directors of KE on September 23, 2025. Upon conclusion of review proceedings, NEPRA issued a decision on review motions (“review decision”) and revised the KE’s MYT issued earlier. The review decision issued by NEPRA carries implications for KE’s financial position. In this context, KE is engaging with the relevant authorities, and discussions are ongoing to address the matters arising from the decision. KE has approached the High Court of Sindh through a Constitutional Petition regarding the review decision, where the Court has granted a stay order restricting NEPRA from taking any action against KE until the next date of hearing. Moreover, KE manages its working capital requirements through a mix of internally generated cash and short-term borrowings. As per management, the actual position of cashflows and the debt profile of the Company is in a comfortable position, and it's expected that the same trend will continue going forward. In parallel with these operational and regulatory developments, KE achieved a milestone with the issuance of Pakistan’s first ever retail-listed Sukuk in September 2025. The issuance was structured in two phases: an initial placement for high-net-worth individuals and institutional investors, followed by an IPO for retail participants. The IPO phase was divided into two periods: an exclusive retail offering period for individuals (including both KE customers and non-customers), followed by a priority allocation period to ensure orderly participation. This sukuk supported KE’s short-term liquidity, and broadened engagement with its customer base. The instrument, amounting to PKR 3,000 million, is scheduled for redemption in Sep 2026, with monthly profit payments distributed to Sukuk holders throughout its term.
Going forward, KE’s long-term outlook will depend majorly on the resolution of regulatory matters. The related developments are being monitored to evaluate their potential impact on the Company’s profile. Continued progress on operational efficiencies, the Company’s gradual transition to cleaner and more diversified energy sources, and a strengthened funding position supported by the successful Sukuk issuance will also be critical.

About the Entity
K-Electric Limited (KE) is a public listed company incorporated in Pakistan in 1913 as KESC. Privatized in 2005, KE is the only vertically integrated power utility in Pakistan supplying electricity to Karachi and its adjoining areas. The majority shares (66.4%) of the Company are owned by KES Power, a consortium of investors including Al-Jomaih Power Limited of Saudi Arabia, Denham Investment Limited (Holding) of Kuwait, and KE Holdings (Formerly: Infrastructure and Growth Capital Fund or IGCF). The Government of Pakistan is also a shareholder (24.36%) in the Company while the remaining are listed as free float shares.

About the Instrument
K-Electric (KE) successfully issued a Retail Sukuk of PKR 3,000 million. The Initial Public Offering phase was oversubscribed by 2.2 times, reflecting strong investor confidence. The one-year Sukuk offers a profit rate of 20 bps over the 3-month KIBOR. A unique feature allows investors to receive profit payments via bank transfer or as an adjustment to their KE electricity bills. The principal will be repaid at maturity.