KOT ADDU POWER COMPANY LTD

S.M. ABBAS ZAIDI,
Research Analyst
, PAGE
Feb 02 - 08, 2009

Kot Addu Power Company Limited (KAPCO) principal activities are to own, operate and maintain a multi-fuel fired power station with fifteen generating units with a name plate capacity of 1,600 MW in Kot Addu, District Muzaffargarh in Punjab. KAPCO has full flexibility to switch over between gas and furnace oil as the fuel source for generation. Fuel switching can be carried out whilst the machines are generating and therefore the company has the ability to generate electricity on either fuel or a combination of both. KAPCO is Pakistan's largest Independent Power Producer (IPP) with a name plate capacity of 1600 MW. KAPCO is the first company in Pakistan to be awarded three simultaneously accreditations under the title of the Integrated Management System. For its achievements in areas of quality, environment and safety, KAPCO was awarded in July 2004 certificates of ISO 19001 - 2000 Quality Management System; ISO 14001 - 1996, Environment Management; and OHSAS 18001 - 1999 Occupational Health & Safety Management. The company listed on all the three stock exchanges of the country.

CAPACITY

KAPCO Power Plant comprises of 10 multi fuel fired gas turbines and 5 steam turbines installed in 5 phases between 1985 and 1996. These turbines are divided into 3 energy Blocks with each Block having a combination of gas and steam turbines. The Power Plant's combined cycle technology enables KAPCO to use the waste heat from the gas turbine exhaust to produce steam in the Heat Recovery Steam Generator, which in turn is used to run the steam turbines thereby resulting in fuel cost efficiency and minimum wastage. The Power Plant is a multi-fuel gas-turbine power plant with the capability of using 3 different fuels to generate electricity, namely: Natural Gas, Low Sulphur Furnace Oil and High Speed Diesel to generate electricity. The Power Plant is also the only major plant in Pakistan with the ability to self start in case of a country wide blackout.

FINANCIAL HIGHLIGHTS

FINANCIAL HIGHLIGHTS
(Rs in 000)

INDICATORS JUL - SEP 08 JUL - SEP 07
Sales 22,485,771 10,232,194
Cost of sales -19,676,903 -7,917,979
Gross profit 2,808,868 2,314,215
Administrative expenses -93,563 -98,659
Other operating income 805,844 192,003
Profit from operations 3,521,149 2,407,560
Finance cost -1,140,925 -392,219
Profit before tax 2,380,224 2,015,341
Taxation -844,080 -703,590
Profit for the period 1,536,144 1,311,751
Earnings per share -basic and diluted Rs 1.75 1.49
Source: KAPCO

During September30, 2008 the receivables due from WAPDA were of the amount of Rs. 35,211million out of which the amount of Rs. 23,815 million is overdue. Turnover for the period was Rs. 22,486 Million and cost of sales was Rs. 19,677Million. Profit after tax for the period was Rs. 1,536 Million (compared to Rs.1, 312 Million in the corresponding period in 2007), delivering an earning per share (EPS) of Rs. 1.75 per share (Rs. 1.49 July to September 07). In Sep 2008, Combustion Inspection of three Gas Turbines was carried out as part of the Company's commitment to operate and maintain the Power Plant at the highest international standards in order to ensure maximum availability for the Company's customer. However, the Company continues to progress matters in respect of its proposed Expansion Project of approximately 450 MW.

KAPCO'S AGREEMENTS

KAPCO is managed through a suite of agreements signed between it and its customer (WAPDA), Government of Pakistan, and fuel suppliers. These include: Power Purchase Agreement ("PPA") (between WAPDA & KAPCO), Gas Supply Agreement (GSA) (between Sui Northern Gas Pipelines Ltd (SNGPL) & KAPCO.) and Oil Supply Agreement (OSA) (between KAPCO & PSO).

KAPCO IN KARACHI STOCK EXCHANGE
DATE OPEN RATE HIGH RATE LOW RATE CLOSING RATE
1-Jan-09 31.56 33.13 32 33.08
2-Jan-09 33.08 34.73 33.08 34.73
5-Jan-09 34.73 36.46 35.1 36.46
6-Jan-09 36.46 38.28 37.2 38.28
9-Jan-09 38.28 40.18 38 38.17
12-Jan-09 38.17 38.9 36.27 36.35
13-Jan-09 36.35 38.1 35.25 37.64
14-Jan-09 37.64 38.75 37.25 38.44
15-Jan-09 38.44 37.9 36.52 36.52
16-Jan-09 36.52 35.55 34.7 34.7
19-Jan-09 34.7 34.2 32.97 33.99
20-Jan-09 33.99 35.68 32.81 35.56
21-Jan-09 35.56 37.33 35.5 37.31
22-Jan-09 37.31 37.94 35.5 37.46
23-Jan-09 37.46 37.1 35.59 36.46
26-Jan-09 36.46 37.25 35.85 36.89
27-Jan-09 36.89 37.7 35.9 37.51
28-Jan-09 37.51 38 37.45 37.51
29-Jan-09 37.51 37.5 36.1 37.48
Source: KSE

SECTOR ANALYSIS

Some 27 Independent Power Plants (IPPs), which are being set up in the country, would add 5305MW in the national grid during the span of 2009-12. According to Pakistan Electric Power Company (PEPCO), eight IPPs would start generation of 1694MW power by the end 2009. Another eight units would start generation of 1741MW power by December 2010. Six IPPs would further generate 1268MW by December 2011 and five units would generate 602MW by December 2012. Among the total 27 IPPs, about 13 units would generate 2651MW power by using furnace oil and six units would use natural gas and would generate 1338MW power. There were 4 other IPPs that would use both furnace oil and gas and would generate 900MW power. Meanwhile, 4 units would utilise hydel resources and generate 416MW power.

CONCLUSION

KAPCO is the first company in Pakistan to be awarded three simultaneously accreditations of the Integrated Management System. The Company has shown an improved profitability as compared to the last quarter. However, the overdue payment particularly from WAPDA is a major concern for this company. No doubt, KAPCO is committed to contributing towards Pakistan's economy by powering the lives of its people by continuously improving its performance through efficient systems, capable workforce and good governance.