PACRA Maintains the Entity Ratings of K-Electric Limited - Retail Utility Sukuk - PKR 3bln - Sep-25:

K-Electric Limited ("KE" or "the Company") is Pakistan's sole vertically integrated power utility, responsible for ensuring reliable electricity supply across its licensed areas, including Karachi, surrounding regions of Sindh, and parts of Balochistan. From a governance perspective, FY2026 marked a significant transition for the Company, with the completion of a comprehensive Board reconstitution. The newly constituted Board appointed Shaheryar Arshad Chishty as Chairman, while Syed Muhammad Taha was appointed as permanent Chief Executive Officer, succeeding Syed Moonis Abdullah Alvi. From a regulatory perspective, KE's Multi-Year Tariff (MYT) framework for FY2024–FY2030 has undergone key revisions. NEPRA initially approved the Generation tariff in October 2024, followed by approvals for Transmission, Distribution, and Supply segments in May 2025, resulting in an average allowed tariff of approximately PKR 39.97/kWh, which was subsequently revised downward to around PKR 32.37/kWh. KE is in ongoing discussions with the relevant authorities seeking resolution on tariff adequacy. In the absence of a finalized tariff framework, KE's audited financial statements for FY24 and FY25 remain pending, with regulatory authorities directing publication by June 30, 2026. KE continues to manage its working capital requirements through a blend of internally generated cash and short-term borrowings. According to management, the Company's cashflows and debt profile remain comfortable, with the same trend expected to continue going forward. In parallel with these operational and regulatory developments, KE achieved a milestone in September 2025 by issuing Pakistan's first ever retail-listed Sukuk. 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 included an exclusive retail offering period for individuals (both KE customers and non-customers), then a priority allocation period to ensure orderly participation. This PKR 3,000 million Sukuk, scheduled for redemption in September 2026, supported KE's short-term liquidity and broadened engagement with its customer base. To date, all monthly profit distributions have been disbursed on schedule, including those that investors elected to direct as adjustments against their KE electricity bills.
Going forward, the assigned rating remains contingent upon the resolution of pending regulatory matters, particularly the finalization of the revised MYT tariff framework and the publication of audited financial statements for FY24 and FY25. Sustained operational performance, including improvements in transmission and distribution losses, recovery ratios, and working capital management, will also remain key monitoring factors. Consequently, the rating will also depend on KE’s ability to ensure timely servicing of monthly Sukuk profit distributions.

About the Entity
KE was incorporated as a limited liability company on September 13, 1913, and its shares are quoted on the Pakistan Stock Exchange Limited (PSX). The registered office of KEL is situated in DHA, Karachi. KEL is the only vertically integrated power utility in Pakistan, managing all key areas – Generation, Transmission, Distribution and Supply – ensuring energy delivery to customers within its licensed areas. KES Power Limited (‘’the Holding Company of KEL’’), incorporated in the Cayman Islands, holds 66.4% and Government of Pakistan holds 24.36% 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 IPO 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.