KOT ADDU POWER COMPANY LTD.

S.KAMAL HAYDER KAZMI,
(feedback@pgeconomist.com)
Research Analyst
, PAGE
May 24 - 30, 2010

Kot Addu Power Company Ltd (KAPCO) owns and manages the operation and maintenance of a 1600-megawatt capacity gas, furnace oil and diesel fired power station at Kot Addu.

The company sells the electricity to its single customer, Water and Power Development Authority (WAPDA). In April 1996, the company was incorporated as a public limited company under the Companies Ordinance, 1984, and now the company is listed on all the three stock exchanges of Pakistan.

TURBINES

KAPCO continues to operate and maintain its power plant in accordance with international standards. Major overhaul of two gas and one steam turbine was commenced in February 2010. As per outage plan, Hot Gas Path Inspection of two gas turbines has been completed; and four gas turbines have undergone Combustion Inspections.

FINANCIAL PERFORMANCE

The company's turnover during the review period was Rs62,880 million (Rs52,978 million in Jul 08-Mar 09) and cost of sales was Rs55,600 million (Rs44,942 million in Jul 08-Mar09). Profit from operations was Rs9,255 million (Rs11,608 million in Jul 08-Mar 09) and profit after tax during the review period was Rs3,718 million (Rs4,176 million in Jul08 - Mar09).

FINANCIAL PERFORMANCE (RS '000)

INDICATOR MARCH 31, 2010 MARCH 31, 2009
Sales 62,879,801 52,977,703
Cost of sales (55,599,526) (44,941,694)
Gross profit 7,280,275 8,036,009
Profit before tax 5,718,079 6,420,756
Profit after tax 3,718,132 4,175,648
Earnings per share (Rs) 4.22 4.74

Earning per share was Rs4.22 during the period under review as against Rs4.74 per share in July 08-March 09.

From January 1, 2010 to March 31, 2010, the power plant generated 1,703 GWh of electricity at a load factor of 58.9 per cent and with an overall availability of 67.2 per cent. The fuel mix was 83.5 per cent on low sulphur furnace oil and 16.5 per cent on high speed diesel.

PLANT TECHNOLOGY

KAPCO Power Plant is the only major plant in Pakistan with the ability to self start in case of a country wide blackout. This 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. Plant is also a multi-fuel gas-turbine power plant with the capability of using 3 different fuels to generate electricity: natural gas, low sulphur furnace oil and high speed diesel.

SECTOR PERFORMANCE

During the year 2008-09, power shortages dragged the performance of economy especially large scale manufacturing. The consumption of petroleum products, gas and coal during July-Mar 2008-09 of the last fiscal year decreased by 3.4 per cent, 2.5 per cent and 26.5 per cent, respectively over the same period last year (SPLY).

On the other hand, supply of crude oil, petroleum products, coal, and electricity during the first nine months of the outgoing fiscal year 2008-09 decreased by 5.5 per cent, 2.8 per cent, 26.5 per cent and 17.9 per cent, respectively over FY 2007-08.

Production of crude oil per day has decreased to 66,531 barrels per day during July-March 2008-09 from 70,165 barrels per day during the SPLY, showing a decrease of 5.2 per cent. The average production of natural gas per day stood at 3,986.5 million cubic feet during July-March, 2008-09 as compared to 3,965.9 million cubic feet over the SPLY, showing an increase of 0.52 per cent.

FDI INFLOWS IN POWER SECTOR ($ MN)

YEAR 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 JUL-MAR 10
Amount -14.2 73.4 320.6 193.4 70.3 130.6 38.2

On average, the power sector consumes 37.2 per cent of gas, followed by industrial sector (20.4 per cent), household (16.8 per cent), fertiliser (19.8 per cent), transport (2 per cent), commercial sector (2.7 per cent) and cement (1 per cent) during last 10 years (1998-99 to 2007-08).

Total installed generation capacity has increased to 19.754 megawatt during July-March 2008-09 from 19,566 megawatt during the SPLY, showing a marginal increase (1 per cent). Total installed capacity of WAPDA stood at 11,454 megawatt during July-Mar 2008-09; of which hydel accounts for 57.2 per cent or 6,555 megawatt, thermal accounts for 42.8 per cent or 4,899 megawatt.

SOLUTION

There is a need to utilise Thar coal as it has the potential to produce 100,000 megawatt for 300 years.

Pakistan has huge coal reserves which are located in Sindh. All South Asian economies including Pakistan are confronted with a massive crisis of power shortage due to which their economies are badly suffering. However, they can overcome this problem if they agree to a single point agenda of utilising untapped energy potential found in Pakistan and Nepal.

Not only Pakistan but Nepal also has the largest hydropower potential in South Asia, as it possesses 83,000 megawatt of hydroelectric power potential. Both the countries have the potential to meet the energy needs of the entire South Asian region, but due to financial constraints they could not tap this potential.

South Asian countries should pool their financial resources and technical expertise to capitalise on energy resources of both the countries.

KAPCO is committed to contributing to Pakistan's economy by powering the lives of its people by continuously improving its performance through efficient systems, capable workforce and good governance.