GuarantCo with Standard Chartered Bank to provide a USD 50 million dual currency guarantee backed loan for K-Electric to support aerial bundled cable roll-out and smart grid solutions in Karachi, Pakistan
Contribution to improve safety, reliability of power and reduce theft
The capital expenditure projects funded through GuarantCo’s dual currency transaction will improve the reliability of KE’s transmission and distribution (T&D) network and through the roll-out of the ABC insulated cables decrease theft and safety related risks, such as electrocution. This will directly benefit the citizens of Karachi and enhance KE’s capability to service additional consumer demand. The projects will result in long-term savings for KE through reduction in T&D losses, estimated to be around 20 percent of the power it generated in 2018, which will allow KE to further invest in infrastructure.
The ABC projects will mainly be targeted at high and very high loss areas in and around Karachi where the lowest income population typically live. This will ensure that people living in those areas will benefit from improvements to their existing connections in terms of safety and supply reliability. In addition, people outside these areas will benefit from additional power in the grid due to lower T&D losses.
KE works closely together with the community to first ensure the conversion of illegal hook connections to legal connections and prevent further theft through ABC roll-out. In addition, the company launches large-scale safety campaigns ahead of the summers and rains.
GuarantCo, through the PIDG Technical Assistance Facility, is providing a USD 185,000 grant to co-finance awareness workshops among key stakeholders about the hazards created by illegal electricity infrastructure. This project will also focus on high risk communities through women and children focused awareness sessions and will have a female empowerment angle as the training will be rolled-out by women in the communities.
Lasitha Perera, CEO at GuarantCo said: “We are proud to have closed this transaction and make a contribution to improve safety, reliability and affordability of power, by reducing currency volatility, and collection of billed electricity among the lower income population in Karachi. The hybrid USD/PKR structure that we developed in conjunction with Standard Chartered Bank provides K-Electric with a long-term currency hedge which would typically be more expensive to put in place using the derivative markets. This improves the overall affordability of the transaction for KE and thereby its customers.”
Moonis Alvi, CEO at KE said: “This collaboration with Standard Chartered Bank and GuarantCo is yet another step in a series of investment initiatives to further strengthen the city’s power infrastructure. So far KE has installed theft-resistant Aerial Bundled Cable (ABC) on nearly 7,500 PMTs across the city and this collaboration will help us accelerate the roll out of ABC to further reduce losses and theft in line with our vision of a load-shed free Karachi. We are also thankful to GuarantCo for the announcement of grant which is in line with our vision of empowering communities.”
Shazad Dada, CEO Standard Chartered said: “Standard Chartered, consistent with our brand promise of being here for good, offers innovative financing solutions for our clients that enhance their operational efficiency. As a bank we are focussed on creating sustainable impact in the markets where we operate. We are proud to partner with GuarantCo in this transaction that will enable K-Electric in building a safer and reliable infrastructure for the people of Karachi.”