KARACHI, May 27: At the extraordinary general meeting on Monday, shareholders’ in Karachi Electric Supply Corporation Limited (KESC) approved the increase in authorized capital from Rs50 to Rs100 billion and the conversion of loans totalling Rs65.3 billion into equity, a statement released by the Corporation said.

The KESC Managing Director Brig. Tariq Saddozai told the shareholders that during the current recovery drive, KESC was recovering Rs10 million daily of the long stuck up arrears from the consumers. He stated that Rs1.4 billion recovery had been insured — half of which had been deposited by the defaulters, while the remaining half was being paid in instalments.

“Earlier, only 70 per cent (of consumers) were making current bill payments, while it now ranged between 85 to 90 per cent”, the KESC MD claimed.

In respect of the conversion of debt into equity, Brig. Saddozai reported that the Finance Division, Government of Pakistan (GoP) had approved, in principle, conversion of the GoP and GOP’s Guaranteed loans of Rs65.3 billion outstanding against the KESC into GoP’s equity.

“The debt-equity swap would reduce financial charges of the company and improve debt-equity ratio”, the MD said, adding that such a swap would also safeguard the interest of the minority shareholders and reflect the determination and continued support of the federal government to bring KESC out of the present financial imbalance”.

MD-KESC observed that the corporation had been suffering substantial financial losses for the last couple of years which had left a gapping hole of Rs57.3 billion in accumulated losses on the company’s balance sheet (Rs60.6 billion at end-March 2002). He said that the accumulated deficit now far exceeded paid-up capital of the company, creating negative equity to the tune of Rs46.6 billion.

MD-KESC stated that the financial restructuring of the corporation would facilitate privatization and help achieve a fair value of the national asset. Besides, diluting the accumulated losses would brighten the chances of KESC’s shareholders to receive return on their investment out of the future earnings of the corporation, at an early date, vis-a-vis current scenario, Brig. Saddozai was quoted to have said.